I've been reading ebooks on my smartphones for around 3yrs and currently use a HTC Desire. I have no problem with eye strain and find it most useful at night because I can read in bed easily. However, I still hark after a larger screen size and intend to ask for a Kindle at Xmas (if Santa thinks I've been good enough!).
Like =X=, my intention is to continue to use the phone to read in bed at night and the Kindle for the rest of the time. Despite being a geeky tech lover, I do miss the look, feel and smell of a real book in my hands and won't completely substitute them until I'm forced to. But, the e-ink screens look about as close as you can get at the moment.
The convenience of having something with a bigger screen, yet still very portable and able to contain a choice of ebooks and audio books with web access is too good to miss.
So, for me it's not smartphone vs e-ink. I want both!