After a week of using the iPad and having owned a Kindle 2 for little more than a year I have come to this conclusion.
E-ink is better for reading than the iPad. The iPad is great and it's cool to have both iBooks and Kindle Reader on the same device. iPad is a better overall device. But when it comes to reading straight text E-ink is less straining on the eyes.
Now who will win the battle of the backpack? They will both be there. The Kindle is so light weight I'm not going to notice it. I don't think Kindle can pull off the kind of universal platform like the iPad for applications and I don't think it should try. I think they both have their places. It's all about the right tool for the job.