Silicon Alley Insider also has an opinion on this competition and does a great job of explaining why the iPhone and the Kindle are not competitive with each other. They include screen size, battery life, and content available on each device. Ultimately, these two devices actually encompass different spaces.
"We agree that Kindle might make more sense as a software application on many devices -- not just one Amazon gadget. But while Stanza/the iPhone is a neat toy, neither the hardware (small screen/small battery) nor software (can't read the books you want) makes it an attractive offering to a buyer in the digital reader market. (And there is a market, we have photographic proof.) If the Kindle dies, don't blame the iPhone."
Better to look at what the Sony e-reader is up to and when the next generation Kindle reader comes out. Even in a down economic climate, we like our technological toys.