Not horrible, but not great either.
I'd say that if you worked on it some more you could really make something of it.
It seems like it would make a great puzzle game. I almost began to enjoy it until I realized there were only two levels :(
My suggestions are these:
-Hotkeys for the physics switchers.
-Better penguin graphics/Maybe a splash for when they make it into the water.
-Sounds. (Boings, Splash, penguins in distress, you get the idea.)