If you are used to using Photoshop on your computer you will be disappointed in Photoshop apps. There are two. Photoshop Express helps you make some color corrections and crop, but there are no selection tools.
Photoshop Touch has selection tools, but they are pretty rudimentary. Again disappointing.
The photoshop apps haven't been updated for a long time, so I expect updates when iOS 7 arrives.
I did many cut out this guy and move that woman over there using Photoshop Elements on Mac. The closest I've come to how I could create masks in PSE is Procreate app. Procreate is a drawing app, but as such they aren't concerned with color corrections or red eye, but they do have selection tools, layers, and you can create a "mask" by painting on a new layer. I think Procrete is $4.99. They just upgraded a few weeks ago.
One advantage of Procreate over Photoshop Touch is speed.