It's really the physical size that's the issue. It's just not nice trying to read a page that's intended to be A4/Letter size on a 6" screen.
PDF is a far from ideal format for eBooks. Although ones created for the Reader's screen size can (and do) look good, they still have the problem that they aren't re-sizeable, like the other book formats are. For example, I like to read my Sony Reader "LRF" format book is "small" size in good light, but go up to "medium" font size when I'm tired, or if poor light. I can do that with LRF, but not with PDF.
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