Interesting that you should post this topic since we have been debating this exact thing in our household. I have the IPad and I love it but I didn't buy it just for the reading function. I wanted a computer that I could also read on. My DD uses it as well but I have strict rules about her usage. She is not allowed to get up and walk around with it. If we need to move for any reason she is to give it to mommy and I will carry it where ever we are going. She accepts these rules with no issues because she has dropped her leapster numerous times. She loves all the applications we can download on it. Just the other night I downloaded a translator so I could help her read a library book she got from her school. I want to be able to pronounce the words properly. She can also watch movies on the Ipad. A nice bonus since I am looking to trade in my minivan and go with a more fun car but it won't have a dvd built in so when we do go on long trips she can always use the IPad or even the IPod touch.
My mom just got the new Kindle, literally 2 days ago. We considered the kindle and the nook. Both are in the same price range. Since the Kindle is on it's third generation they have really considered the layout and function of it and perfected it. The nook is close but I think they need some improvements and chances are the next version will address the issues. We got her the $139 model and it is WiFi. The higher price one is WiFi and 3G. Funny thing ... yesterday her Kindle locked up and wouldn't attach to the network and finally wouldn't shut down. We did a quick search and found that this is a bug with the new Kindle. We had to hard reset it a few times but finally got it back on. We called the tech support and they pushed a new software out to it. It is suppose to take care of the problem.
Really it depends on the individual and what they want from the device. I didn't want exclusive reading ability but when I do read a book on the IPad I enjoy it. My mom, however, finds the IPad too cumbersome and awkward. I do like that the IPad not only allows for ibooks but you can download apps for the nook and kindle and have access to all the major ebook distributors. While we were trying to work on her Kindle we thought we might have to send it back since it was not powering back up. She had just bought a book and was upset that she couldn't read it. So I gave her my IPad with a downloaded copy of her book. It made her even more thankful when her Kindle was fixed! She hated the weight of the IPad.
The other thing to consider is the way the device is lit. IPad is more like a computer screen and I certainly wouldn't find myself outside on a sunny day reading. Too much glare. With the nook and the kindle you can do this. But you certainly can not read the nook or the kindle at night without some form of light on. The IPad doesn't need additional light to read. I know the kindle has covers with built in book lights which solves this problem and we bought one for my mother.