We have 2 Kindle's in our household and have experienced mixed reviews on its utility. On one hand, it is a great device for traveling, on the other, it's just so parochially just a reader (a good one) that, along with the Blackberry, I feel Internet and application disabled when compared next to the iPhone.
Amazon has been testing the Kindle in a few Universities (wonderful idea for backpack laden Middle schoolers too). Unfortunately, the initial review from Princeton is not too compelling. The need is there for a tablet sized real internet device (sorry MSFT, still suffering from buying your Gen 1 OS). Between smart phones, tablets, PC's and the iTouch, there seems to have been enough trial and error to collect solid information for product managers somewhere to hit one out of the ballpark.