Kindle or iPad - the Battle of the Small(-ish) Giants

Obviously, at the time of this writing, I don't own an iPad. They are about to ship in a few weeks, though, and I think it's a good moment to reflect on eReaders from a reader's perspective.
I read lots of books, in the order of three to four each month. I bought a Kindle a year back, when it still cost $349, and was all excited when I got it. The idea was intriguing: you get a device that is a replacement of a whole library. You don't have to lug around books, and you can even download new books at a discount directly from the store.
The implementation, on the other hand, leaves much to be desired. The opportunity was definitely there for Apple to march into the field, and they certainly did. The low-end iPad is certainly compatible price-wise with the Kindle (the equivalent in functionality, with 3G module, clearly isn't), and the deals Apple has been pushing with content providers are working in its favor.
Let's review what's good and bad about the Kindle first:
Good About Kindle

• e-ink. The Kindle is amazingly easy to read, especially in conditions that are punishing for a normal computer display. I can take my Kindle to the pool, to the beach, on a train, and never have to worry about bright conditions spoiling my enjoyment. Especially because I particularly enjoy reading in the sun.
• Battery life. I can leave my Kindle unplugged for weeks before it complains it needs a charge. It's wonderful! Of all my gadgets, the Kindle is the only one that survives for the amount of time I expect it to, and that translates to reliability. A device that needs to be plugged in all the time, especially a device (like the iPods or iPhones) that come with a weird non-standard plug is totally useless to me.
• Online connectivity. The ability to download a new book or magazine once I am done or bored with the current reading is incredibly important and alone worth buying a Kindle. Imagine you are at the beach and suddenly in the mood for a tome on Non-standard Analysis. What to do? You are not going to run and get one, you are just not going to read.

Unfortunately, that's pretty much it. A few items could have been used strategically but weren't - for instance the fact it runs Linux could have been used to make it expandable, but that isn't happening. It was a really stupid choice and would have given a leg up to Amazon, especially considering what was going on in parallel on the iPhone, but Amazon slept through that.
On the negative side, we have a bunch of problems. Some of them are strategically addressed by the iPad, some others aren't.
Bad About Kindle

• Screen size vs. device size. An eReader is a device to read. All I want from it is a screen. All interaction with the eReader should be done via the screen. Not so with the Kindle: all interaction occurs with a keyboard at the bottom, buttons on the side, and a joystick menu. That's plain horrible, and I wonder what Amazon was thinking when they came up with that concept. For starters, the keyboard is virtually unusable: the keys are too small, the tactile feedback too weak, the keys spaced too far apart. Using that keyboard is so bad, I find even an on-screen keyboard a better solution. Then there is the joystick, which is unusable as soon as you use a protective cover - which is almost mandatory. You end up with a whole lot of useless buttons when all you want is screen. 
• Better annotations. It goes without saying that the terrible keyboard does its part in this, but right now the Kindle is quite bad at taking annotations. First there is the dreadful joystick you have to use to get to a particular section of the text, where all you want to do is point at it. Then you have to type the annotation using the crappy keyboard. Finally, the annotation is not saved in any format you could find useful unless you have it on the Kindle. Even there, then, the annotation isn't something whose visibility you can turn on and off, like in a Word document for revisions. Instead it appears as a footnote. Bleh. If Amazon realized how important annotations are, how wonderful it is for a reader to be able to scribble annotations on the side and to turn them on or off at will (something you cannot do in a real book), they might even do a little more work about them.
  
• Big Brother is Watching You. I don't think Amazon could have done more damage to the Kindle than what it did when it deleted legally obtained books from Kindles. It was a strange case: someone sold a book on the public domain market not knowing the book was still under copyright (understandable, considering the bizarre length of copyright claims). The people that bought the book didn't know this was against the law, but the books were still deleted from their Kindles without warning. One morning they were there, the next they weren't, and they could do absolutely nothing about it. For a reader, the problem is not technical or legal, it is emotional: I love books. When I buy one, it's mine. I treat them well: the text books I had in college 20 years ago still look like new, through something like 15 moves in three countries and across 12 time zones. I don't want to buy a "book" only to find out that it's gone. Even just the possibility of that occurring is horrible enough that it makes me extremely reluctant to ever buy an eBook on the Amazon store. Amazon should make it clear in writing that it is never under any circumstances going to remove a book from your device or your online storage without first obtaining my consent. It can generously charge me if there is an issue, but removing the book without my consent is absolutely not an option.
• More Stores. When you go to Amazon, they do a good job at offering you choices. You see the book at a given price, but then there are a series of "New and Used" books you can get potentially at a (substantial) discount. That's all gone when you shop for eBooks. Amazon is the only seller, and you are not even given any option. You buy the book from Amazon, or you have to go offline, download the book and manually install it onto your Kindle. You used to not even be able to read text files and PDF - fortunately I believe the latest software update does away with that oddity.

The iPad, of course, is not really an eReader. The short battery life makes it quite impossible to rely on (in that it's intensely different from a cell phone, since you are typically much less focused on your eReader and forget to charge it much more frequently). The price is too high, the screen makes it useless outdoors. To be sure, there are going to be lots of Apple freaks that will buy one, even stand in line to get one on the first day it comes out, but for a person that likes reading, the iPad is a bust.
What about apps? What about color?
I don't know about apps, mostly because I have trillions of other gadgets that offer better app experience than my eReader. I have my trusted N900 for everything gamey, my netbook for everything that requires a real OS. If I had to choose between using the Kindle for games and having two weeks of battery time, you know where my heart is.
On the other hand, apps that expand my reading experience and make it more enjoyable, those would be extremely welcome, especially if they do not significantly alter my overall experience. I could envision a forum app that functions as a virtual reading community, where I could discuss a particular chapter or phrase in a book. I could envision an Atlantic app that would tell me which articles match keywords in the book I am reading. That kind of thing. And, of course, crossword puzzles, sudoku, and scrabble. Online. Low bandwidth, low computing power.
Color is definitely a no-no. Yeah, sure, I heard a lot about text books and the need for color, and there is definitely a market for it. Just not for me. I find color beautiful, very important, but if I had to sacrifice the battery life, forget it. Once there are color e-ink displays with the same characteristics as black/white ones, I'd switch, but to go from e-ink to LCD: no way!