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I actually have read an ebook on my ipod touch. My ipod is jailbroken and I installed books.app and read Cory Doctorow's new book Little Brother on my ipod. I liked the touch screen just fine. I liked reading in landscape (horizontal) more more so than portrait (vertical), because the lines of text were longer and it was easier to scroll along without getting your finger in the way of the text. The application does have an onscreen "next page" button, but I liked scrolling along more so than the button.
Using my ipod as an e-reader actually inspired me to get a seperate device (the sony reader) to use exclusively for reading. I liked the ipod fine, but I realized that it wasn't a great option if I was going to be reading alot of stuff on it.
Also even though there is an application for the ipod touch for reading comics I can never get it to install correctly. Where as the sony reader (and from what I hear the iLiad) works very well for comics without too much trouble.
It is an interesting situation. So many devices that we carry have overlapping functions. I myself carry an iPod Touch, Nintendo DS, and the Sony PRS-505. All three of these devices play mp3s (I have a flashcart for the DS), all three can view ebooks (the ds with the flashcart and the ipod with a hack) All three can read comics, Both the iPod and DS play games and can play videos. If I carried a cell phone it would likely be able to do most of these things as well.
I think the thing is if you are really interested in something you'll buy the dedicated device for it. If you really like video games then you'll prolly have a PSP or DS because the games on your cell phone aren't going to cut it. Where as a more casual game player will likely find the games for the cell phone are fine for passing a little time while waiting in line. I think ebooks are the same way, the casual reader might find the iphone is perfectly fine for occasionally reading. But someone more interested in reading will likely not find it sufficient.
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