When it comes to the burgeoning eTextbook market, we can argue about the best hardware, software/services and content, but in reality all three are going to have to come together to build the perfect eTextbook device. And cost definitely will matter.
The Kindle Fire is nice device for $200, but just because it shares the broad tablet category with the iPad doesn't make it an iPad substitute anymore than driving a Honda Fit would be an Audi A4 substitute.
Barnes and Noble released the NOOKColor yesterday. You can read some details about in my post on FierceContentManagement. And here's a video tour explaining some of the highlights. They don't emphasize the ability to access the Web and play music and games on here, which I think is a real differentiator in the eBook Reader market and moves it from Reader to tablet.
In this Kindle ad, Amazon takes a swipe at the iPad and makes a nice play. Of course, what they don't tell you is that while the Kindle is great for reading books outdoors, it doesn't do much else and that's why they can afford to keep the price so low.