I'd be cautious about using a Kaoss pad for recordings, but live it's another story - used tastefully, those delays and reverbs can sound brilliant. I did a gig a few months back just using a PSP running LGPT and a KP3, and it was great, especially the tape delays and the reverbs which could be used for that "massive reverb snare" dub effect just by touching at the right moment. (And the sampler was great for transitions as well.)
I don't like the filters - they're aggressive and unsubtle, and unfortunately most people's first and only point of call when they get a Kaoss Pad. I've lost count of the number of second-rate live (and Youtube) performers who just leave it on the FILTER1 setting and wiggle their fingers around unrhythmically. Less is more...
The potential for layering four effects offers intriguing possibilities to freshen up the options a bit, but was the Kaoss line really needs is selective-band effecting, so you could (say) add delays to the highs whilst leaving the bass uneffected.
Just my two cents. Kaoss can be very toylike if overused, but that touchscreen offers genuinely expressive possibilities if deployed musically and with subtlety...