Aquaphor - it's made by Eucerin and can be found at the drug store near the creams and lotions. Our pediatrician recommended it.
It works wonders for chapped and dry skin, including lips. It is a thick ointment, and I use it on my daughter, Emily. Her lips get very chapped in the winter, and she picks them, which makes them bleed. I put it on her at night (when she is asleep, because she doesn't like it), and her lips are 100% improved by morning. When they get really bad, they are usually fully-healed within three days.
Denae