Thinking about this for my girls
By the time your kids are in school, depending on where you live, there may be no such thing as a textbook anymore. The only books kids may have are children's books simply because there's so many of them and they don't "go bad" or get beat up like textbooks.
If you want your kids to have a tablet, buying them a Kindle Fire isn't a bad idea. Realize that the main reason you're buying it is price. Not software, size or quality.
If you want them to practice reading and have something to play games on, I would go iPad over anything else everyday of the week. iOS devices are proven to be the easiest to learn how to use, so consider that. My wife is a 1st grade teacher in MA and next year her classroom is going to have iPads. I know they won't be allowed to go home and I don't know how many, but iPads are embraced the choice of educational institutions.
If you want them to practice reading and not play games, get a E-ink tablet like the Nook or Kindle. There will be no eye strain and E-ink devices are cheaper overall, but they are strictly for reading.
I want them to experience the colored photos ("The man with the yellow hat" in Curious George becomes confusing when it is in black and white - ha). We have lots of ipads, but there is too much to get into and I don't want to have to enable/disable restrictions every time. We have an old iPad1 I could probably convert to the "reader", but I would rather have a designated book sized color ereader. I've looked at the Nexus7 and I like it a lot, however, there is also a lot they could get into as far as apps and browsing goes so i would have the same question.
I bet Amazon is working on the "Kindle for Kids" -- if not, they should be!!