I guess I've never understood the single purpose device thing...
I've seen and used a 3rd gen Kindle, and it was very good, but aside from the battery life, a dedicated e-reader for me makes no sense...
(...kicks hacked nook with Kindle app under the couch)
Honestly, it all depends on how much you read. If you're an avid reader who reads a book a week (or more), then an LCD tablet simply isn't going to cut it. E-ink is popular because it actually imitates the thing it's replacing...books.
Sure, I read on a daily basis a lot on LCD (forums, news, etc), but it's just different when reading books. Paragraphs tend to be longer, and you generally read for a longer period without taking a rest. I don't know about you, but when I'm reading something on my computer LCD, if I don't rest my eyes after a few minutes, I experience some discomfort. I don't have to do that with e-ink.
I rather do go with a single purpose device for a lot of things anyway, since they're a lot better than your jack of all trade devices. Hell, I carry a cheap point and shoot camera with me instead of using my phone's camera. Admittedly, the camera sucks, but it's still 10x better than the phone's camera.
I use the Kindle 2 as my e-reader. Most of my content is purchased off of the amazon store, and the few things that I get in non-drm epub, I just convert it with calibre. I've bought a couple of things off of the nook store as well and just stripped the drm and converted it to the mobi format.