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Okay, here's the thing that phone/palm/iPod readers aren't taking into account: E-ink displays. The reason I hate reading e-books on a computer/phone/palm/iPod is that stupid backlit screen. E-book readers with E-ink displays are easier on the eyes and for me at least, make for a more pleasant reading experience. I have both a Blackberry 8830 and an Ipaq 1910 (I also had a Jornada at one point), and used them as e-readers for as long as I could stand it. In my opinion, the convenience of the small reader made for an inconvenient read, plus the backlit display was tiresome.
I don't think the iPhone will hurt the dedicated E-reader market at all. If anything I think people might catch a book on an iPhone and then later decide to try out an e-reader like the Sony, Kindle, or Iliad. Once they do, I doubt they'd go back. But each to his own.
It's just that every discussion I've seen about E-readers vs iPhones didn't really take into account the e-ink screen, which is what brought me over to the "e-side" from paper books.
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