The great Collin Cunningham from Make Magazine posted a how to video for a DIY iPad stylus. I guess the hardest part is finding conductive foam if you don't play with electronics very often.

We've used a couple of these for about 18 months now, and they've put up with being beaten up by a 3 yr old, and hauled around in a tote, so I'd say that for $7, they're really quite good.

The cheapest one you can find.

I use a griffin stylus for sketching on the iPad, it's very good. I tried the Pogo but don't like the spongy tip.