Charles Petzold has a good point about the digital versus paper books debate. Digital books are great when you first get them, but how are you going to read them 25 years from now? How many people reading this have computer gadgets from 1982 that still work? Can you read the disk from 1982 circa IBM PC? I know I don't have any 5.25 in floppy drives anymore.
Even if you still have the e-book on a CD-ROM in 2052, good luck trying to read it. The CD-ROM format should still be readable 25 years from now because the size of the disc seems to work for most people. The problem will be that nothing will be able to handle the DRM encoded in the e-book. Google pulled the plug on it's Internet-based DRM system last August, after a year of use.
There are times that I liked having an e-book reader. A few years back, I got a Viewsonic V37 Pocket PC as part of a MSDN promotion. One the applications that was pre-installed was Microsoft Reader. I was able to find a large variety of books in the Microsoft LIT format and it was easy to create Reader files using a MS Word plugin. When we went to China to adopt Laura, I had a bunch of books on my V37 to read and it took a lot less space to pack. But that was the exception, not the norm.
On the other hand, you have to deal with battery life, not a problem historically associated with printed books. Battery life on my V37 was pretty horrible, 3-5 hours of sustained Reader usage. That's not very useful on a 9 hour plane ride. I managed to find a little gadget that would power my V37 from a 9V battery, that basically tripled the battery life.
Reading at the beach is something I like to do. You just can't do that with a digital book reader. First of all, you can't read one of those screens in bright sunlight. You also have to worry about dropping it into the sand (not a good idea) or into the ocean (warranty killer).
How many times can you drop a paper book before it breaks? I no longer use my V37 because it was not immune from the effects of gravity. My daughter dropped it and the fall from the height of a three year old (at the time) was enough of a shock to permanently shut off my Pocket PC.
What would be a great use for an e-book reader would be being able to rent from one from the local library and fill it up with books from the library. If I was going on vacation, I would pay $15 to $20 to rent one for a week with 5 to 10 books in it. It's not much different than getting a bunch of books on cd audio from the library and ripping them to your iPod (except the e-book rental would be legal).
Sony has been trying to play in this market for years with their Reader Digital Book. I have yet to see one of the Sony devices out in the wild. Amazon has the resources to sell a huge number of Kindles to libraries at greatly discounted prices. They would make it over time with the e-book sales. Plus it more people will use one if they can try it for a small fee. They cost $400 now. For that kind of money, you can get a cheap laptop and Adobe Acrobat Reader on it. Come on Amazon, you know what you have to do.