First off, if you were thinking of buying a Kindle DX, I'd say forget it. The iPad is a knockout punch to that device. At just ten dollars cheaper than the low end iPad, there just is no contest. The two devices are the same size (both are 9.7"), but the iPad has a color screen and can do a lot of things that Kindle just can't do.
Yes, the DX has free 3G wireless for buying books, but the iPad has 802.11n, and for most common usage, it just isn't that hard to find a place to hook up. Book prices may be a bit higher on the iPad, but they will be in color and multimedia with the promise of moving video, color charts and pictures, and so on. I also consider the on-screen keyboard an advantage for the iPad -- the keyboard on the Kindle is basically a waste of space.
As a travel companion, all you can do on the DX is read, although there is a rudimentary browser, and more functionality coming. Subscriptions are another Kindle selling point, but it's not a stretch to believe that Apple has something like that coming as well. Comparing the iPad to the Kindle DX, I just don't think there is any contest, and Amazon is going to be forced to think about how they are pricing and marketing the Kindle DX.
OK, on to the standard issue Kindle at U.S. $259.00. This decision is a bit trickier. It's about half the cost of the low end iPad, has a smaller screen, but does have built in no-charge 3G. That's mainly for buying books, as web browsing is pretty painful. Once again, books seem a bit cheaper on the Kindle at this stage, but I've noticed prices creeping up. Battery life with wireless off is about 2 weeks, and the iPad can never touch that.
For the immediate future, Amazon has far more books on offer, but that will likely change over time. If you have the smaller Kindle, I would not have anxiety about the iPad if you are mainly a reader. If you have the DX, I'd feel a bit queasy.
It's likely you'll be able to read your Kindle books on the iPad, just as you can on your iPhone or iPod touch, but they'll be black and white, with no rich illustrations. Amazon will stress that the iPad will be a great place to read Kindle books, but I don't think in the long run that's a cogent argument.
Looking out to the future, I think the odds favor the iPad. As an author myself (of a book about a sixties film producer), the idea of converting my dead tree book to something with short film clips and even musical examples makes me giddy. As a consumer, I'll want to get books that have those kinds of features.
In the early days of technology, new inventions tend to mimic the old. The TV was really a small movie screen, with radio quality audio. In fact, a lot of early TV was really old radio shows repackaged with pictures, i.e. Jack Benny and the Lone Ranger.
The Kindle mimics the book reading experience. It does it well, with a crisp display and an easy-to-use interface. Apple seems to want to take the experience beyond just mimicking a book, to create a new experience. Publishers will have to extend themselves to meet those goals, and so will authors.
In the short term, these gradual changes will be invisible, and I'll happily keep using my Kindle. In the long term, devices like the iPad will win us over and evolve our relationship with our media, just as the iPod did.
How about you? Second thoughts about a Kindle? Or a Nook. Or a whatever?