My folks got Kindles last year and love them. I tried them out and was impressed, but didn't get one as I knew I'd be getting an iPad.

I've been using iBooks to read the Earth's Children series (Clan of the Cave Bear, etc.) on my iPad 2. I'm on book 4 now and like it for the most part. One of the extras that came with CotCB was video interviews with the author - not something the Kindle could do(the latest Nook probably can).

The only issue I have with iBooks is it doesnt support a "night mode" where the display is dark with light text. I've read some free (out of copyright) books, like the John Carter of Mars series, via the app eReader and it has that feature. With it you can customize the colors used for both the day and night modes. I did find a workaround for iBooks - in the iPad's settings I set General -> Accessibility -> Triple-click Home to the Toggle White on Black option. Now triple clicking the home button puts the display in a photo-negative mode. Works fine for reading (though I'd prefer amber text on black), but sure makes those author interviews look funky :)

Edit: one thing I really find handy in iBooks is the built in dictionary. Just touch a word for a second to bring up a context menu to get to the definition.