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I have an iPad 2 and a K3. K3 is for novels, and the iPad is for most of my web-based reading using apps like Flipboard and Zite for a nice magazine-style presentation. I can and frequently do read my novels on my iPad, but it's much bigger than it needs to be for such an application, so I prefer the Kindle when I just want to chill with a book for recreational reading.
If I had to choose one, I'd choose the iPad as it's much faster and more useful overall, but the Kindle is one of my favorite toys for its size and battery life.
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