The problem with these devices is that they encourage quick print-to-e content conversion and nothing more. In fact, they even discourage some of the simplest ways of enhancing print-to-e conversions. Embedded links are a great example. If you're a Kindle owner how often do you click on those links? More specifically, how often do you groan as you click on those links, knowing that the browsing experience ahead is painful at best? The irony is that although the Kindle was the first to include wireless functionality, that feature is really only good for one thing: buying content from Amazon. Every other time I've used the "experimental" browser I've been disappointed. That's because, at its heart, the Kindle is a reader and it doesn't encourage any other use.
If you love your Kindle you'd probably say, "so what?...it does what I need it to do." My point is that as long as we're willing to accept this extremely limited functionality, and not ask for more, there's no incentive for Amazon to enhance it and there's no incentive for publishers to build richer content.
Are you really thrilled with the content that's available on today's dedicated e-readers? I'm not. And it's not just color and video that I crave. I want to see a major leap forward, like when entertainment went from radio to TV, for example.
Transportation is another great analogy. Years ago, trains were not only a great way to travel, they often represented the only way to get from point A to point B. Then cars came along and totally changed the transportation industry. It didn't happen overnight, but think about how much you take for granted now that you're not limited by train schedules, tracks that only go certain places, etc.
Trains still exist today, of course, and they serve an important need. One-trick dedicated e-readers will probably exist for a long time too, but we desperately need the flexibility of something more than dedicated devices. Smart phones and netbooks are nice too, but the form factors aren't perfect and battery life is often an issue.
The consumer experience could be greatly improved by a multi-function device with rich content options. If you're a publisher and you're worried about the race to lower prices for quick print-to-e conversions you too should want more powerful devices since they'll allow you to charge more for the additional functionality of your content.