I played Isotope and the controls were perfect, sized OK and game play was just like on the iPhone. It was just HUGE! There is a reasonable amount of jaggies, but still was very acceptable. I actually tried briefly a number of iPhone games that were 2X and all of them were actually OK. Again, some jaggies, but no issues for me that made playing no good.
However - the games specifically designed for the iPad- graphically it is like comparing your old TV to an HD screen - everything is so clear, colors pop - the iPhone just does not hold a candle to them. But, the iPhone is much more portable to me. I will get some select titles for iPad but will still probably use the iPhone for casual gaming...
the only issue i see will be on-screen controls (virtual d-pad etc) as the ipad's screen has a bigger border, plus even at 2x zoom there's a black border around the upscaled app.
I would assume that black border that's left after the upscaling is just because the screen ratio on the iPhone/iPod touch is 16:9 whereas the iPad is 4:3. They appear that way, anyways.
I had a question about the pixel doubling: Does it make the games look really bad? Or does it actually manage to make them look quite a bit nicer than you would expect an app blown up twice its size to look?