Do IPod apps work on IPad?

Yes - as long as they are compatible with the iOS on the iPad. If the app needs 5.1 on the iPod - you have to be running 5.1 on the iPad as well.

The iPod specific apps will appear in half size on the iPad screen, but can be enlarged by tapping a 2X button that will appear in the corner of the screen. However, the screen image will be pixelated and the resoultion will not be all that great as a result.

iPad: Using applications designed for iPhone and iPod touch

In addition to all this, if the app has a + by the download button then it's a 'universal app' and scales itself to fit the screen of whatever device it's on. If you have both iPad and iPod it's something you can look for and consider when you're buying apps.