I've got the first, second, and large Kindles. OK, two were for my wife. Paraphrasing the OP:
•E-Ink text was sharp but not paper like at all to us.
Good observation. It isn't actually paper.
•Klunky size because of the clumsy keyboard at the bottom.
I agree if you mean the first version. The 2nd version is a perfect size, and I wish the iPad was as thin and light.
•One trick pony. You can read a book.
Or you can play winmine, browse the web (poorly, but
for free) to view Webmail, Wikipedia and even Google Maps. Versions 2 and later can read your text to you. Send your own documents to it for easy access. All versions can play MP3 files. PDF support added too. JPG, PNG, and GIF viewing as well (in 16 shades of gray). It'll also show you the time.
•No backlight.
True. Room light is all that's needed. Saves power.
•Amazon books have some room for improvement. No page numbers and no contents or index.
If the book has a table of contents, it's there. Page numbers is an irrelivant concept for ebooks with scalable fonts and variable screen sizes the book might be read on.
•Navigation is sequential stepping through menus by pushing buttons.
Almost true. There's a GoTo function and a HOME button. The iPad has a button too. Ipad navigation is a sequential stepping up or down through a hierarchy of menus/screens within any app that is more than one level deep.
•The price! The Kindle DX is 10 bucks less than the $499 ipad and has a single purpose.
See above. Add global wireless included in the price, and a g-sensor.
•No flash
True.
Xenon Flash tends to temporarily blind readers. Bad thing to have on an ebook device.
•No camera
True. How many real books have cameras though? Really.
•No multitasking
You can listen to music while you read. Dual-tasking.

Feel free to take a walk while reading and listening to music for tri-tasking. If you pat your head while walking and reading and listening to music that's quad-tastic!
My point? The OP didn't really know what his Kindle was capable of, so he trashes it for not being worth the money he paid. No one really knows what the iPad is capable of, which is the reason for all these threads of conjecture and theory. Hopefully this forum can be flushed out anew when the iPad actually ships.