If anyone should fear the iPad, it's definitely Amazon with its Kindle eBook business.
Despite the hype, the "magical" iPad is really just an overgrown iPod touch. Apart from a few interface changes to take advantage of the extra screen real estate, it doesn't seem to do anything my iPhone can't do. The only feature that's really caught my eye is the new eBook reader app, which will be supported by a new iBookstore section in the iTunes store. It's a fair assumption that the iPhone and iPod touch will also get access to the iBookstore, although Apple might hold out to drive iPad sales (as it did with HD movies in iTunes to drive Apple TV sales).
While testing the Kindle, I decided to play around with Amazon's Kindle iPhone app and I was quite surprised by how good it is. The default font size on the two is the same, although you only get half as much text per page on the iPhone. The iPhone's redeeming feature is the ability to tap or flick to smoothly turn pages. This is much less intrusive on the reading experience than the firm click of the Kindle's Next Page button, which is followed by a one second wait as the screen flashes black and refreshes. I read a novel on each and, despite its smaller screen size, I'd say the iPhone actually makes it easier to get engrossed in the story.
I haven't played with an iPad yet, but it's a safe bet that the iBook interface will be just as slick as the Kindle iPhone app. You should be able to run the Kindle iPhone app on the iPad as well. Assuming the Kindle app's font upscales smoothly, you'd have the best of both worlds.
Amazon's latest effort is the larger 9.7-inch Kindle DX, which features a similar screen size and price tag to the iPad. Even though the Kindle DX only has a monochrome display, Amazon is using it to push newspaper and magazine subscriptions - with two big catches. Firstly, there are no Australian publications available. Secondly, if you live outside the US, Amazon only sends you the text - not the images. This might not matter so much if you're reading the The New York Times or Newsweek for the informative articles, but it kinda sucks if you're reading PC Magazine or Sports Illustrated. I imagine Playboy and Hustler aren't all that excited about the monochrome Kindle DX, even inside the US.