My colleague Brandt Schneider (Things to Come Blog) asked me about the differences between Noteflight and Notion (for iPad). Both work on the iPad; Noteflight can work on any Windows or Mac computer (I'm not sure about Android right now), while Notion is a $99 (a bargain) on Windows/Mac.
In a nutshell, Noteflight is a cloud-based HTML program that can be used for basic composition and playback, and on a computer, can be connected to a MIDI piano for keyboard entry. Noteflight also allows for sharing and teacher feedback. Notion is an app that runs on the iPad and advanced notation features (more arriving on a regular basis). Notion has professional sounds from the London Symphony Orchestra, and using the iPad USB Camera Connection Kit, can be attached to a piano. When using an external MIDI instrument, Notion can record in real-time (this does not work with the onscreen keyboard).
Both products can import and export files as MusicXML files, so they can be brought into any modern music notation program.
I would compare Noteflight to Finale Notepad, MakeMusic's free music composition product. It has enough power for most core K-12 (probably 6-12) educational composition needs. Finale Notepad, of course, does not run on the iPad, so this would be an ideal place for MakeMusic to enter the iPad or HTML 5 notation market.
I would compare Notion for the iPad to Notion 4 for Windows/Mac (the goal of the company is to have both products with all of the same core features, and then to upgrade the products together), or MuseScore (the free composition app for Windows, Mac, or Linux). Finale and Sibelius are also comparable, but are the pro-level apps that offer nearly unlimited customization of scores (and of course, are in a completely different price category). For the record, MuseScore has a lot of customization available to the user as well.
I come from a Finale background, so Noteflight (just as with MuseScore and Sibelius) treats deleting notes in a way that I'm not accustomed to (you can't delete a note mid-measure, you have to go and change the value to what is correct), whereas Notion acts a bit more like Finale in this regard.
Noteflight offers educational packages (see Music First), Notion for iPad is available under educational pricing, and the Windows/Mac version is available as an affordable lab pack. Noteflight does offer free subscriptions for a limited amount of use, and personal subscriptions for more intensive use.
My general inclination is to recommend Notion, as the app continues to improve, there are still big plans for the app, and quality sound playback is important to me. Then again, it is hard to dismiss the savings of Noteflight, particularly if hundreds of students and multiple teachers need access to the program in your school. The sharing/social qualities of Noteflight may be more important to you, or the quality sounds and rich features of Notion may be the deal breaker. 100 copies of Notion would currently be $799; yearly access to Noteflight for a classroom is $200 per year. So you would potentially pay the same cost after four years of use (It sounds like iOS 7 will allow schools to reclaim apps that have been distributed for reuse)–only if 100 students used the program. There may be a point where Notion could be the cheaper option if a smaller number of students needed the program (such as for a music theory course).
Don't forget to look at some of the free options for Windows/Mac already mentioned, such as Finale Notepad or MuseScore. And although I don't know anything, I wouldn't be surprised to see MakeMusic (Finale) and MuseScore enter the iPad marketplace with a notation product (both have had a viewer available). The Steinberg team may also enter the mobile apps marketplace.