In my experience, glare was the most difficult thing to address in making a live iPad demo video. The black plastic sheet with a hole in it they came up with here is an ingenious solution.

Many app videos (including my own) just end up screencasting the simulator. I originally avoided that since it seemed like a cop-out, but then I noticed it in a lot of other app demo videos.

Live demos are also tricky if you have pets, though: http://www.youtube.com/watch?v=BIG6rPvfKnw