My son has had peeling and cracking between his toes, and it did bother him when we put him in the bath. We've gotten 3 opinions on what might be wrong:
1) A nurse at our ped office (on the phone) suggested it could be dry skin and that we just add lotion, let him wear cotton socks only, and change his socks more often. A few weeks of Burt's Bees hand lotion didn't help much.
2) At his 12 month check-up, the doc who was seeing us thought it might actually be athlete's foot and suggested we put tinactin cream on his toes. That helped, but then it just came back. So I don't think this was the answer.
3) Our actual ped at 18 months suggested it might be eczema, and that a litttle bit of hydrocortinsone cream might help, followed by a barrier lotion (we just used hand lotion) and cotton socks. We tried this for a few days, it cleared up, and it hasn't come back.
It could be either of these 3 things, which is why I've listed them all. Our problem was that it really bothered my son in the bathtub (he'd scream!). If your son doesn't seem to mind, I'd just leave it. Otherwise try a little moisturizer first and see if that's all it takes.