I could (and probably have) written scads on the topics, but my first response to this question is to ask another question: What do you most want to do with your device?
If you are an avid reader, and you want to scale back your paper books, and enjoy the convenience of having multiple books in your hand (at a very light weight!), you may be considering an ereader.
So why would you get an iPad?
First, I have to note: I am NOT an Apple fangirl. I detest their business model of caging apps, not allowing 3rd party apps, and the bizarre manner in which they reject many apps from their store. I don't like how they feed the constant cycle of "buy, upgrade, buy again, upgrade". I also did not buy my iPad, but won it.
That said, the iPad is a great product. It's well-designed and easy to use. As a multi-media content consumption device, it's great. I have a page full of news applications - I really enjoy the NYTimes app, and the NPR app. Video is very clear on it. And app writers are making more and more clever things for it all the time. It's a slick, fun piece of technology.
If you're looking to CREATE content in a mobile device, I'd suggest you go with a netbook. Because you're really going to want the physical keyboard - you can get one for the ipad, but IMO, having to carry that around cuts down on the mobile ease of the iPad. And I see that some people have been able to draw in it, but if I'm drawing, I want my desk computer & my wacom tablet. (note: I think the iPad could do some development on this in the long run and make it WAY better)
As an ereader? It's neither as convenient or as comfortable as a dedicated ereader (Kindle or otherwise). The nature of its LCD display inherently creates eyestrain after a while, while the e-ink technology of dedicated ereaders eliminates that entirely. Its weight is also inconvenient to use it as an electronic book - the ereaders out there are comfie to hold in the hand - more so than a paperback, in fact.
Here is an interesting post showing the microscopic differences in display between an iPad and the Kindle. Further down in the post are microscopic views of paper print, also. What's interesting is how well the Kindle duplicates the print.
As far as the experience of reading on an Kindle/ereader goes, many say "but I like reading a book as a book!" and say they think they'd be distracted by the device. My response? Try one. Once you start actually reading, there's no distraction. It's so intuitive, it doesn't intrude at all. What it comes down to is that you are reading - you're not "using an ereader." And as someone who has issues with gripping, and vision issues, I can't overstate the wonders the light weight and the adjustable fonts.
One more thing - if you get the fullhog 3g iPad, you're locked into an AT&T service contract, so your price tag is far more than your initial output. If you get the 3G Kindle, the access is free.
So yeah, I'm glad I have the iPad and enjoy using it. I would not have bought one-price is too high, I'd want the 3g AND wireless, but glad I have it. I'd already wanted to get one of the other tablets that will be coming out in the next 6 months/year- probably one of those that's Android-based. But for reading, you'll tear my Kindle outta my cold hands!
(note for commenters - feel free to write loveletters about Apple and their products, but I won't engage on that issue. I've come to my feelings on their development/marketing/sales techniques/etc after years of examining them)