Quoting you, "Am I missing something? If it does all that it is no longer a Reader."
The Sony ereader cost me $100 (I think) brand new on Craig's List, maybe less, can't really remember. As a e reader I love it. Gives no problems and the e ink is easy on the eyes at night. i can drag and drop my drm free books and read them.
Now I have a Blackberry Playbook, which is just as good as an e reader but it does much more. Now if I don't want to read at night I can watch videos or read newspapers or watch sports. At $199 its more versatile. Not a bad thing. Doesn't break the bank and serves more purpose.