We need to wait and see what Apple has done with the ePub reader for the iPad. Apple isn't shy about being a prime-mover with regard to specs that are incomplete and may well give the format the shot of innovation that it needs.
The primary problem with ePub lies with the spec itself, especially its lack of a paging module, which is a serious oversight. Adobe's xsl-fo extension is an attempt to rectify that, but doesn't go far enough.
Adobe has fixed the justification issue in the version that ships in the PRS900 and they need to release that so that manufacturers can update older devices. But this is one area in which Apple's vertical integration will show its advantages, since there's not much Adobe can do if the manufacturers don't want to recompile their firmware.
The only thing I'd really blame Adobe for is being too timid and not stepping up to force through the changes that ePub needs. You can describe Steve Jobs in various ways, but 'timid' isn't one of them.
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