http://www.youtube.com/watch?v=x31wl-rMOks
This video, Patrick Madden of Secret Base Design takes a look at using the iPad audio to MIDI app MIDImorphosis for transcribing guitar playing into tablature:
MIDImorphosis captures the pitch of incoming audio, and converts it into MIDI notes that can be used to control iOS synthesizers or external equipment. In this video, we show how to use the app to create a transcription with the iOS app Progression.
MIDImorphosis is available in the App Store for $4.99.
Don’t think that’s gonna work except for the most basic stuff. Unless I’m mistaken it’s monophonic, which most guitar music is not. Also, the obvious latency would make performing and tracking fast tempo and rhythmically complex passages difficult at best.