Legally, you can write a contract that says Amazon has the right to break into your house and repossess books they've sold you that they no longer have the rights to. Just because it's legal doesn't mean it's good business.
Could you cite the law which would make such a contract enforceable?
Amazon is using DRM and EULAs to accomplish things that people would not normally expect when thinking about a book. Amazon wants people to think of the things they "buy" on their kindle as books, but this incident demonstrates that they are not.
Amazon is (probably) legally within their rights to do what they did according to the kindle contract, but that doesn't mean it's good for business.
Just because people expect to have certain rights, doesn't mean they do. If people expect to have rights (to keep copyrighted material indefinitely) that the law of the land takes away from them, the problem isn't with the mechanism through which that law is implemented, it's with the law itself!