I think it's a little bit ironic that Jerry Pournelle is taking this position on ebooks, given his historical stance on ebook "piracy," but I guess that's a different matter in his mind.
Anyway, maybe what the iPhone will do, ultimately, is popularize small multi-function devices with high-resolution screens. Most PDAs don't have a screen with that resolution, do they? (I wouldn't know, I'm still using a Palm IIIxe, and I'd read an ebook on my laptop before I'd consider using that as an ebook reader.)
Or maybe what he means is that the iPhone may make ebook reading sexy, the way the iPod made small digital music players sexy, even if the iPhone itself doesn't "own" the smart phone market.