If you were a student (or if you are a student) would you buy a $500 Kindle to read textbooks, plus a lot more to download digital versions of the texts? Unless there's a slam-dunk cost benefit that students can see, I don't think this is going to make a huge impact on the textbook market at this price point.
As for magazines and newspapers, I don't think most people can justify a $500 expense to read magazines and papers that they can get for much cheaper in print or free on the Web. I subscribe to the WSJ for $90 a year and read the NYT for free on my iPod Touch and Web browser. Even if the NYT started charging $50 for the Touch and Web versions, it would still be just a fraction of the investment required for reading it on the Kindle.
It's the e-ink, the portability, the battery life, the weight of the device.
Everyone I know that has a Kindle loves it.
I am sure that Kindle owners love the devices, for the reasons that you stated. The problem I have is the price. Students and newspaper readers will have a tough time justifying a $500 purchase, especially in this economy.
I would also dispute the effectiveness of taking notes on a laptop. As soon as you want to write anything other than text (e.g. diagram or equation), you'll slow to a crawl. (At least, I would slow to a crawl.)
I agree that $500 is a steep up front investment given the similarity in price point to a low end laptop.
I would rather spend $350-$400 more on a touchscreen for a new laptop.