No iPhone but I do have the iPod touch 4G which also has a Retina display. You are absolutely correct in that the 4G with the Retina display is far superior to the older models without it. The older models had too much space between each pixel which human eyes can see and it causes problems with some people after reading for an extended time. The same problem occurs in many LCD monitors on computers. If you look carefully you see the individual dots (pixels) on the screen and the tiny vertical and horizontal lines that separate the rows and columns of pixels. The older iPhone and iPod touch screens have 320px x 480px on their 3.5" diagonal screens. The new Retina displays have 640px x 960px, so those tiny lines separating the pixels are much more difficult to see and result in a much better reading quality.

My NOOKcolor (NC) has 600px x 1024x on its 7" diagonal screen. The pixels per inch are about half 169 on the NC compared to the iPhone Retina display's 329, but both displays look very sharp and neither shows the lines separating the pxels. It is those lines, and how thick those lines are, that have the greatest impact on reading. With the lines (dark spaces surrounding the individual pixels) not noticeable on either the iPhone or the NC, the reading experience is terrific.

I too bought my iPod touch 4G for reading when I wanted a very compact reader that fits in my pocket, but for me the reading experience on a tiny 3.5" screen is not that good. I did it for years with various PDAs, but it was never that great. The Retina display makes it better, but the small screen crowds words and makes it difficult to even get one paragraph completely on a screen. I find that I rarely use my iPod touch 4G and will probably sell it at some point. Price-wise, the NC costs just a few dollars more than the iPod touch 4G but gives you much more.