Kind of the ultimate blow to the iPad and iBook. Even if the iPad has color and is backlit, just how many people will choose a $600 book reader over a $0 book reader that's 'almost' as good?
(Don't ask me)
It is an ultimate blow for all of the other book readers (Nook, Sony's readers). Amazon is in iPod territory here: their readers are better and cheaper than the competition and likely to remain so, at least for the short-term (next 2-3 years).
I can pick up the Kindle and use it just as I would use a paper book but I'd never use it to surf the web even if it was possible.