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First of all, congratulations.
There are two schools of thought regarding journalistic integrity, under whose purview product reviews fall.
The first is that the journalist should personally distance herself to the maximum possible extent from the subject of inquiry in order to maintain objectivity. No payment, no friendships, no family relations, no gifts, no special treatment of any kind. These all compromise the trustworthiness of the reviewer.
The second is that the aforementioned separation is illusory at best, and misleading at worst, and that genuine transparency lies in fully disclosing one's relationship with any subject or persons under discussion. That way, readers are free to make their own judgments about the author's credibility.
It is my opinion that the latter position, typically adopted by new media acolytes, is less morally rigorous than the former and more easily leads to conflicts of interest. That said, there is a difference between being offered a free review copy of a book, and accepting other favours such as travel, meals, and gifts. You should also ask yourself: will accepting this offer prevent you from being fully honest in your review? Will it bias you in any way? If you cannot answer "no" then you owe it to those who trust in your reviews to decline. Otherwise, you are reduced to the station of PR mouthpiece.
As for legality, I don't think you're under any obligation to report the publisher to Amazon. I am sure this sort of thing happens very regularly, however (dis)tasteful you may find it.
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