In the first option you pay Demibooks $249 to get the digital file to upload to Apple - then every sale you make apple will pay a royalty of 70% to you. So, if you priced your book at $1.99 Apple would pay you roughly $140/sale. In this option you would also need to set up a developer account with Apple for $99/year. The cool thing is that they will hold your hand and do the submitting on your behalf!
Personally I feel that this is really worth it. I've already made back the money I spent on I EAT YOU! and then some from Talespring and my royalty is 50% with them. I would advise that you do everything in your capability to make your app appealing emotionally i.e. amazingly funny, cute, sad, gross, offensive, touching, etc. The time for A is for Apple is over.
The second option is really a continuation of the first - I just wanted to make sure that we discussed it separately. If you go through the development and publishing process in the first option and Demibooks likes your book they may decide to include it in their Storytime library. This is especially exciting because it's hard enough to get attention for your digital book without any extra "love". Demibooks curates it's library for artistic quality, story, and overall product integrity. In some ways this feels like a higher form of indie publishing and what I have been predicting for many months - that there will be collections developing online to help consumers find higher quality digital story books.
Here is a little on Hedi - creator of "Develop A Children's Book iPad App"
Heidi Berthiaume loves to create stuff - from websites to iPad apps to written stories to fan music videos. She spent fifteen years as an information architect providing instructional documentation for programmers and designers so they could develop applications and websites for businesses such as 3M, Hilton, and American Airlines (which paid the mortgage but was less fun than writing a novel and developing her children's picture book Bud the Bunny into an iPad app). The portal to all of her stuff is http://www.heidi2524.com/
I'll be doing an update post on "I EAT YOU!" in the not too distant future...