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I think after gadget geeks, the next big market will be real serious readers, folks who can see the value of being able to carry hundreds of books in a compact device. In fact (admittedly this is only anecdotal) those are the types who most often ask me about the Kindle when I'm out in public with it. This is still a minority.
For e-paper to get to the masses, the kinds of things people have mentioned here have to happen, especially price cuts and some sort of assurance (such as interoperability on all platforms) that the books they most likely would want will be available. I think price cuts will be inevitable as research costs are paid off and the basic technology becomes a mass produced commodity.
The real problem is going to be lack of interoperability and gaps in any one company's selection. It's hard to predict how, when, or even if that will be solved.
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