A lot of people will pull up a book, say "yep, it lets me read books," and then go back to Facebook.
I doubt many will sit and spend 2 hours reading at a time.
The guy who said the Kindle's screen fades in direct sunlight has no idea what he's talking about. It looks its best in well-lit places. The brighter the light, the easier it is to read.
The Kindle is genius for sitting and reading text for extended periods of time. But the world is full of people who don't do that, and constantly gripe about why the Kindle doesn't do things it was never intended to do and shouldn't do, such as surf the Web competently. Those people will convince themselves (in many cases have already convinced themselves) that the iPad is a "better e-reader than the Kindle". Then they'll go about their lives reading no more than 1,000 words at a time.
I think the iPad might be good for newspapers and magazines, but I really find it farfetched that more than a handful of people will read War & Peace or The Brothers Karamazov start to finish on an iPad.
Before I bought my Kindle 2, I read a couple books cover to cover from Kindle Apps for iPhone... Call me crazy