SnapShop Showroom (free) is a fun little app that allows you to create and save rooms using furniture from many well-known realtors such as IKEA and CB2. You can use their limited background library, a saved picture from the web (as I did below) or a picture from your camera- the fact that you can snap your current surroundings and then put furniture in it is what makes this app augmented reality:
This video shows an earlier version of the app in action. The above shot shows it works great on iPad as well.
This would be a nice app to use with older students or adults as well as young ones. The category of furniture can first of all be developed with this app, as well as descriptive attributes such as size, shape, color and function. Additionally, as the app is essentially for shopping (don't worry, you won't accidentally purchase a sofa during a therapy session) pricing information is provided, which would be a great context for a life skills activity around budgeting.