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I think an iPad is kind of overkilling for a dedicated e-reader. They are bigger and heavier and battery is not so good; they can also do much more than an eink device but hence the reason for a higher price and bigger screen. A Sony sounds like a better deal for your aunt.
Now, keep in mind that Kindle has tons of free books as well and is an International device; you can get those from stores different than Amazon. So, if you do not have a really strong reason to put public libraries on your top list, I would suggest a Kindle 3 as well. Even not DRM protected epubs can be easily converted in just 1 min or so via Calibre.
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