Note: The pictures in this example show a DODOcase for iPad2, but the same principle also applies to the DODOcase for gen1 iPad.
Yes, this gap is intended in the design of the DODOcase for iPad. The spine on the DODOcase for iPad will wear in over time, causing the front cover to settle, limiting the gap between the left edge of the front cover and the top surface of the iPad itself. When you get a brand new hard cover book, the joint between the spine and the front cover will be very stiff at first. As the book is used over time, this joint will loosen up. The same principle applies to the DODOcase for iPad . To account for this process, the case has been specifically designed to have a slight gap between the left edge of the front cover and the top surface of the iPad, going along the spine. This gap gives room for the front cover to settle over time. Over the course of time and with continued use, the joint between the spine and the front cover will loosen up, causing the left edge of the front cover to lower itself closer to the top surface of the iPad and the bamboo tray. These two pictures demonstrate how this gap is limited over time and use. The first picture shows a new DODOcase for iPad2, and the second picture shows a DODOcase for iPad2 that has been worn in.
Another way to think of this process is by visualizing the three pieces of board that the cover is built with. At fist the boards that make up the front and back covers will sit directly on top of or on bottom of the spine. Over time they will move to lie on the side of the spine. This is a bit difficult to explain in words, so this diagram should better demonstrate this process: