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I wouldn't recommend an iPad as a dedicated reading device because it's expensive, oversized, and the available reader applications don't take advantage of the fact that it has a full featured browser installed. If you plan to use it for something else in addition to reading, or if you plan to view many graphical PDFs, then it may be a good option. One nice thing about the iPad is that pages flip quickly and searches are easy.
I've used iBooks and Stanza, neither of which let you easily select a word and look it up in wikipedia or an internet based dictionary of your choosing. Eyestrain hasn't been a problem for me, but I rarely read a single work for more than an hour at a time. As someone mentioned, PDFs render quite nicely, but the applications I've used to read PDFs in (GoodReader and iAnnotate PDF) were hard to read out of, for some reason. The text didn't seem as crisp as it did in the ereader applications for works in different formats. I was reading long double spaced academic articles; it might have just been that the articles themselves were boring and the PDFs were displaying fine. :P
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