It's really down to personal preference as well as reading habits, I'd say.
I prefer to read on my eInk Kindle 3, although I've read the odd book also on my first generation iPad and bits and pieces on my Samsung Galaxy S2 phone.
I've found that I can deal with the LCD screens reasonably well in daytime, indoors and in good light (that falls on the screen from such an angle that it doesn't cause too much glare and doesn't reflect everything back to me) - in other words, the experience is fairly close to reading from a computer screen (I have a matte 22'' Eizo monitor).
I really find it tiring to read from an LCD screen, whether matte or glossy, after a day's work on the computer, though, and in the evening in artificial light.
If I'm not too tired from work, it's manageable on the iPad if I've found a good place to sit and read (as regards the angle of the external light sources), but not as nice as the Kindle; if I'm really tired and have had a long day, I can't read from an LCD screen for pleasure at all (tired, headache, eyes get dry more easily, screen reflections become more annoying) while I can still easily spend a couple of hours reading from the Kindle without any noticeable problems.
All in all, I am glad to have the iPad as a backup or for books that are a hassle to read on the Kindle (e.g. I ended up reading one of the Bartimaeus Trilogy books on the iPad due to its extensive use of footnotes, which were easier to manage on the iPad than on the Kindle Keyboard - however, then I just gave up and got the whole series as paperbacks instead, which were in the end more convenient for this particular series), but for leisure reading, I do prefer eInk. I also can't read from an LCD screen in low light, so the backlighting is not a bonus - I need to have the room well lit / have a good external light source / good ambient light to be able to read from the LCD screen at all.
(I've experimented quite a bit with the different background options in various reader apps as well as with brightness levels; I've found that for me, sepia or sepia-like background and the brightness set at around 50% works the best on the iPad. Any lower brightness and it becomes too muddled for my eyes.)
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