This my new Android app. I really tried to make it simple, beautiful and not annoy the kids and their parents with ads.
Though I am not sure what is the best strategy to add in-app purchasing and still be nice to users.
My daughter is 3 and she enjoys the coloring apps on my iPhone. We have a few that I downloaded for free, one was on sale, one has IAP and one is ad-supported.
The ad-supported one shows ads in a separate "pick your color" UI and I'm happy with the design. It's a flood-fill app like yours and while the drawings aren't as good as yours it's functional enough.
The one[1] with IAP is a "color in the lines" style app with a lot of UI: Picking brushes, viewing past drawing and picking a drawing are pretty rich. I ended up springing for the IAP (probably the first time I've ever indulged in it; there's probably a marketing lesson in there somewhere). The app showcased a bunch of locked coloring books that my daughter kept asking me about, so I bought them so she had more to do in the app. One interesting thing was that they partitioned the app's IAP. You could buy one set of markers, or collections of books for a certain amount, or buy the entire IAP library for a marginally higher price. For the record, I found the IAP design to be ok. The price is a little higher than what I'm personally accustomed to, but not unreasonable. What does bother me about this app is that it continues to show me ads for other apps by this developer. Please don't do that.
Hope this feedback helps you decide how to design your IAP.
Let me also add that it's mind boggling how the iTunes UX designers decided that IAP descriptions should be truncated.
re monetising. I assume you plan to bring out more things to colour? If so you could announce them being available when the app is first opened. Assuming that is most likely to be done by the adult it should avoid worrying people. Make anything which could lead to a purchase happening obvious and make the bright coloured attention grabbing button take the user (possibly the child) to the game.
unless there is a safer/better way to go about it. Good luck!