There was an interesting article
on Ars Technica today which talks about it from the other side of the fence. The article was written by a former employee of Palm Digital Media/Peanut Press, and talks about their attempts to get content from publishers. Page 4
is particularly relevant to this discussion:
This makes absolutely no sense until you look at it not as a way to sell e-books, but rather, as a way to ensure that e-book sales do not eat into hardcover sales. That, in turn, makes even less sense, given the comparative profit margins of hardcover books and e-books, but, well, there you have it.