Apple's iOS 4.2 upgrade has prevented data being read from some USB devices because the fondle slab puts out five times less power than before.
The iPad has a camera connection kit enabling pictures on SD cards in digital cameras to be transferred to the iPad. This works well with the previous iPAD O/S, iOS 3, but that has 100ma going out to the USB device whereas iOS 4.2 only dribbles out a weak 20ma, not enough for many USB-connect devices.
An Apple support discussion forum thread covers the issue.
One contributor, Gshackman, with a Blue Yeti microphone bought from an Apple Store to work with the iPad camera connector, has the same problem; insufficient power for the mike following the iOS upgrade. He posted this point: "Come on Apple fix your mistakes, do a little testing before you turn your user base into beta testers!"
Using a powered USB hub apparently works as a fix. There has been no official communication from Apple yet. ®