My motorcycle is as expensive as a used car
... but ... can my bike replace a car or vice versa? I don't think so. They are different.
We don't even have a Kindle fire in our hands yet, however, they are different devices too.
The Kindle Fire is bigger and a more "tablet around" device than the iPod Touch. The iPod touch is more portable, but I would say is too small for being a dedicated reader (I know some people use it as one though) and in my opinion, for reading books, eink is still the way to go.