The Apple Camera Connection Kit includes two adapters: 1 USB connector and 1 SD card reader.
The essence of the issue with the connection kit and iOS 4.2 is that connected devices that require power of more than 20mA will no longer work. That means that many USB keyboards (Apple’s included) will no longer work with the iPad, as well as USB flash drives. When the user connects a device that is not self-powered and requires more than 20mA of power from the iPad they get the following alert: “The connected USB device requires too much power.”
This issue not only pertains to camera-related devices but also is an issue for microphones. USB microphones were compatible with the iPad running iOS 3.2.2 but now some of them apparently use more than 20mA of the iPad’s USB power. Although many users are unhappy that they cannot use many of their USB flash drives, USB keyboards, or USB microphones anymore users are even angrier that many of their USB cameras no longer work with the iPad.
In Apple support forum, Problem has posted on forum posts on Apple.com
The iPad Camera Connection Kit’s USB adapter was built so users with USB cameras could plug their cameras in via USB on the go. Now they cannot anymore as most USB cameras require too much power from the iPad. This issue is unpleasant for photographers relying on the iPad to import and upload their photos on the fly. It is unknown whether or not this is simply a bug in iOS 4.2 but we do hope that it is and that Apple will fix it in an upcoming software update. To summarize, the iPad Camera Connection Kit no longer works with non-self powered devices.