I voted for the Sony Reader, which I find more elegant overall than the iLiad. The iLiad reminds me of the Newton: larger and more feature-rich. The Reader reminds me of the PalmPilot: smaller, cheaper, more practical for mainstream usage patterns. And I like the fact that the Reader has a cover.
I much prefer its paperback size to something larger that's still not fully A4. I am impressed by the iLiad and wish iRex well, but I'm leery about spending $700 on an unestablished product from an unestablished company whose fate is probably tied to their one product's success or failure. A touchscreen and WiFi would be nice, but not at twice the price. And I still suspect (but hopefully Henrique will disprove) that the iLiad's WiFi implementation is limited to iRex's iDS proxy.
But I'm still holding out for an unequivocal list of which formats Sony supports natively and through conversion. HTML, which was mentioned early on by journalists at CES, hasn't been mentioned in since; and if it's not supported, as it is with the iLiad, the Reader might be a false economy after all.