The filter only reveals itself, at the top of the screen, after you search for something in the store. To get started, enter a word in the search field in the upper right corner of the screen and click the search key on the keyboard. The filter ribbon will appear above the search results.
From the search results, you can apply the following filters: Category, Sub-Category, Release Date, Customer Ratings, Price, and Device. There is also a clear filter button to cancel all of the applied filters to the list.
This is nice when you are looking for something specific. In the image above, I searched for "link" and was then presented a list of apps. I then applied filters to narrow the list down to family games that were free for the iPad.
For my family friend free game search, I did it a different way. I searched for the term "game" which revealed 13,361 apps. I applied the "iPad" filter which didn't change the number so the store knew I was on an iPad. I added the "free" filter and the number of apps dropped to 3,662. Applying the "4+ stars" filter reduced the list to 338. I then added the "games" category to the filter to dropped the list to 317. Finally I applied choose the sub-category of "family" and the list provided a total of 42 apps for me to choose from.
I would still rather be able to get a list of app without having to put a term in the search field first. I hope that Apple adds a filter button at the bottom of the App store that would allow me to filter the entire store based on my filter choices. Using my example from above, I would then be able to see all of the free family friendly iPad games available in the store.
Additionally there is a feature called "iPad Upgrades" in the Genius area of the app store. What this feature does is shows you a list of apps that you previously bought or downloaded that were iPod or iPhone versions that have iPad versions. It shows you whether the iPad version is free or is available for a price.