Several users have reported an issue in which iPads generate the error message “Cannot Use Device. The connected USB device requires too much power” when previously working USB devices are connected via the Dock after the update to iOS 4.2.1. This issue may occur with SanDisk CF readers, cameras connected via the camera connection kit,
Fix: Use and externally powered USB hub
Unfortunately, the only viable fix for this issue thus far is the use of an externally powered USB hub. Battery-powered models can be had for roughly $20.
You can also downgrade to iOS 3.2.2, which will restore the old, higher power limitation, though you will lose all of iOS 4.2.1’s benefits.