Mark Papermaster, the ex-IBM heavyweight that IBM is suing to stop him from working at Apple, has been named senior VP of devices hardware engineering running Apple’s iPhone and iPod development.

He replaces Tony Fadell, pretty much the father of the ARM-based iPod and iPhone, who now becomes a special advisor to Apple CEO Steve Jobs. Papermaster will report to Jobs.

IBM is trying to hold Papermaster, its top PowerPC expert, to his non-compete, which would delay his joining Apple for a year. IBM claims he knows all its secrets.

In the spring Apple bought PA Semi, a fab-less semiconductor start-up with a low-power/high-performance rendition of IBM’s PowerPC chip.

Fadell and his wife Danielle Lambert, VP of HR at Apple, are supposed to be cutting back on work to spend more time with their family. She’s supposed to resign at the end of the year when her replacement has been hired.