The problem with e-books in schools below the College level is the readers get broken. High School age and below kids tend to be careless. They throw their back packs down, play keep away with them, etc... So traditional e-book readers don't work.
That said, as someone responsible for the IT needs of a school, I've been experimenting with one of these: http://www.peeweepc.com/store/pc/viewPrd.asp?idproduct=70...
The Ruggedized nature and tablet mode seem to make it possible (again I'm still experimenting and am a little nervous about the hinge at this point). So don't get me wrong, I think a solution exists. But the Governor just wants an immediate cheap solution and that's not the way e-books are going to happen.