The Nintendo DSi is launching on April 5 in the U.S. and the Japanese company teased DICE Summit attendees today with a look at some applications for it.

The DSi is the third major upgrade to the handheld game player since its introduction in 2004. Selling for $169, this version will have two cameras, better sound, a wireless application download store and other improvements.

One of the applications in development is Moving Memo Pad, which lets you use the stylus to draw pictures on the touch screen. You can then animate those pictures so that they in effect become animated movies. For instance, you can draw a rocket ship in three different parts of the touch screen and then animate it. The animation will show a rocket ship blasting off. You can insert your own photos into the creations and share them with others.

The Moving Memo Pad is part of the DSi Ware that will be available after the launch of the new handheld, perhaps in May. Tom Prata, senior director of product development at Nintendo, said the company is encouraging small indie developers to make games for the Nintendo version of Apple’s AppStore. The DSi Ware store is where developers can sell DSi content to gamers.

As an example, he pointed to the Nintendo WiiWare game, World of Goo, which is one of the most successful games released for download on the Wii. Kyle Gabler, co-founder of 2D Boy, the two-man shop in San Francisco that developed the game, told how the company made the best-selling game with $10,000.

Gabler said he was so frugal that he washed his hair with pet flea shampoo for a month rather than buy some new shampoo. Please check out the GamesBeat 09 conference on March 24.