I don't think a subscription model would work very well. At least not if that was the only way it was available. As that would limit sale even more to only avid readers. I got a used Kindle 1 in early March and I've read 4 books so far and two of those were free books. Obviously any kind of monthly fee that was high enough to make it worthwhile for Amazon (say $20 or more) wouldn't be worth it for people like me.
The fact is that it's just a new technology and it will take a few years before prices drop and get to a level more acceptable in the mainstream. $200 was my absolute upper limit, and that's what I paid for my used Kindle.
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