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Just a couple of observations, although I feel that it's pretty well all been said already.
I've just been staring at my main bookcase and thinking about all this. I've got some huge glossy photography and art books, some small books with nothing but text where the formatting is not as important (either to the reader's enjoyment or to the author's vision), books which require user input (school text books, report books), books which are designed for being taken from one place to another and others which clearly are not. I have no urge whatsoever to have a single device that faithfully reproduces all these media, just because they are all books.
With regard to the magazine cover and the idea that we should be able to reproduce the look and formatting while adding indexing, why not? People will want that, publishers will want to be able to do it, and soon enough the hardware will be able to do it. But why should they have to do it on the same hardware that others will only have purchased to read novels and news on? And more importantly why should the file itself have to be in the same format?
PDF is a wonderful format for a wide range of uses, including ebooks in some cases. As a teacher, translator and photographer I use pdfs every day. But they're not the ideal format for reading the type of document most people are reading on today's devices. And for the time being the formats have to adapt to the documents being sold, not the wish-list of tech-savvy early adopters who are willing to fiddle about with their files.
One more thing, devices with smaller screens are definitely here to stay. I will never want a larger device for reading, while others will never want a smaller device for their uses. There's room in the market for both, but there's only room in my pocket—and my budget—for one.
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