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As I've said many times, such devices won't kill dedicated readers like the kindle. The avid reader set will likely always want a small, portable reader with an e-ink (or something similar) screen.
But such devices are what is needed to real advance the ebook market. Avid readers--people who read enough to even think about buying a dedicated reader--are a niche in today's world. If ebook sales are going to go mainstream, they have to find there way to the average Joe who only reads a handful of books a year (if that). And the way to do that is for multifunction devices they buy for other reasons (Internet, Music, Videos etc.) to also be able to purchase and display ebooks.
As for it having no point if it just keeps an LCD screen--again such a device likely won't be designed as a reader. It's a multi-function tablet that happens to do books--just like the iPhone/iPod touch can use the kindle store. And LCD screen is 100% fine for reading for someone just reading a handful of books a year and hardly ever reading for more than an hour. You just have to think outside of the avid reader box to see the appeal of such devices.
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