A feature that has long been request by educators has finally arrived in iPad 2: video mirroring. Video mirroring shows exactly what's on your device's screen on a second display, like a projector, television, or monitor. We're used to video mirroring with laptops--many teachers do this everyday.
iPad 2 requires either the Apple VGA Adapter or Apple Digital AV Adapter. The VGA adapter connects to most projectors while the digital adapter connects to HDMI, which is common on newer televisions. Apple Digital AV Adapter also outputs sound while the VGA adapter outputs only video to the display.
I've used both adapters and they are very simple to use. In fact, there is no software to install or settings to adjust on iPad. Within seconds of connecting iPad and to the display with the adapter, mirroring is automatically activated. You can even rotate iPad between portrait and landscape and the mirrored image rotates as well. Read a little more about video mirroring from Apple (the page only mentions HDMI, but mirroring can certainly be done with VGA).
During presentations and workshops I have alternated displaying my laptop and iPad 2 to a projector simply by disconnecting one from the projector and reconnecting the other with no issues. It takes just a few moments for the projector to recognize the new input source. Having a VGA switch (Monoprice has them cheap) would handy so that I don't have to disconnect and reconnect to the projector each time I want to change which device I want displayed.
Some apps have been designed to output video that is different than from what appears on the device's screen. For example, Keynote's is mirrored until you tap Play. Then iPad outputs your slideshow while showing the controls on iPad's screen.
Unlike using a document camera, mirroring is a crystal-clear image without glare and smudges. However, there is a major drawback to using mirroring instead of a document camera to demonstrate apps. Those viewing cannot see what you are touching nor the gestures you use on the screen. Using a document camera (like the $69 Point2View USB Camera) might not always be in perfect focus and show glare, but at least viewers can see how you are interacting with the touchscreen.
I made a short video demonstrating video mirroring through VGA and compare it to using the Point2View camera. I used an Epiphan VGA2USB signal grabber to input into my computer. This method produces interlacing (those horizontal lines you see when there is lots of movement). When connected to a display, you definitely do not see any interlacing.
Currently video mirroring only works with iPad 2. Sorry iPad 1, iPod touch, and iPhone users. If you jailbreak your device, you can get access to Cydia, an alternative to Apple's App Store that has apps that Apple will not allow in its own store. DisplayOut is available in Cydia for $3.99 and gives iPad, iPhone, and iPod touch video mirroring capabilities. Cydia also has apps like iDemo designed to share what's on your handheld's screen. While jailbreaking is legal, it can void your warranty, goof up your device, and make it tricky to install iOS updates. I have never jailbroken any of my handhelds--now with iPad 2, I don't have to jailbreak for video mirroring.