As of the 0.6.0 update, Cows now drop Leather, which can be crafted into leather armor. Cows drop 0-2 Leather upon death. As of the 0.7.0 update you can milk a cow using a Bucket. Once you have a bucket of Milk, you can make cake.
How To Milk A Cow In Minecraft PE:
You Will Need: Bucket And a Cow
To Milk a Cow hold the bucket in your hand, tap and hold pointing at the air, and move your finger to the cow's position.
WARNING: THIS MAY NOT WORK EVERY TIME