Wow it's a good thing I've arrived to save this thread from uninformed replies!
Japanese people read-a ton. It's not so apparent now that cell phones have become ubiquitous but you will see a lot of people reading books on the train during their 90 min commute to work. If you go to any bookstore in Japan you'll see people standing in front of the shelves reading books from cover to cover-and they don't get chased away by the sales staff. Books in Japan are almost all the same standard physical size (small) probably so that they're easy to read on the go. If you buy a book in a bookstore they will insert it in a nifty brown paper sleeve which protects the book from damage and perhaps hides the title of what you're reading.
As for why the Japanese aren't leading the ebook world I'm not really sure about that but if I had to guess would say that corporations have a huge amount of power here. Japanese TVs cost far more in Japan than they do in America, you can't rent videogames and when you stay at a hotel you have to pay per person and not for the actual room. The entertainment industry seems to have a lot more teeth with regards to copyright protection than anywhere else. Just look on You Tube. It's not difficult to find j-pop music videos which have been removed due to copyright protection. It's the same with the book industry. Book publishers in the US seem to wish that the ebook would just diasappear and it's no different in Japan except for the fact that the book publishers here can actually make it happen. I'm not sure who's at fault here but I tend to blame the Japanese for not having a spine. Sometimes I want to yell, "Stop letting them $&@* you like this, an American would never stand for something like this!". But what do I know-perhaps they really don't have any other options. I try to boycott when I see a terrible deal but they don't seem to have a problem buying a Harry Potter novel broken up into two parts for double the price when the English version is just one book foe the normal price.