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A password on the file isn't secure. It would prevent casual snooping, but if anyone has access to the file, and really wants to see what is in it, a password isn't going to stop them.
The bad guys need not know that the device contains sensitive information. Don't put a label on the reader which says "Sensitive information, do not open!" You could simply not make it obvious what the file is. Don't name it "Top Secret Plans for World-Wide Domination", that draws attention. Instead, name it "Grandma's 101 Favorite Turnip Recipes".
Even if the bad guys know that there is sensitive information on the device, you can protect the data by keeping physical custody of the device. If you trust the person not to give away the password, why not trust them to take care of the data? If you don't trust them with the device the data is on, why trust them with the password?
Nothing would prevent e-reader manufacturers from allowing you to put password protection on files, but there really isn't much demand for it, and it would probably just cause them problems, with people calling customer support because they forgot their password.
I would like to have password protected folders, not to keep out determined hackers, but to keep out casual snoopers. I might want to let someone use my Kindle, but I may very well not want them to have access to every book in my collection.
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