Casey Chesnut wrote an ink/character recognizer using neural networks (via Incremental Blogger) and seems to be getting pretty good recognition results out of it.
It's a great introduction to neural networks and has many good pointers on the topic. No code is included though.
The segmentation problem (grouping strokes into characters) is pretty tricky, so he's using the APIs included in the Tablet PC OS to get around it. Recognizing unistoke characters only (Graffiti style) is another way to avoid the trouble ;-)
Casey's website has tons of other cool stuff that I need to dig into, like neural-net-based image grouping or gesture recognition using a webcam.