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.