The new Kindle Paperwhite looks very promising. While the drop in storage size is regrettable, the front-light illumination will be amazing for evening/night reading. Even if using the light reduces the battery life to 1 month, that's still a compelling case to take a serious look at getting one.
I've played around with Kindles and I'm really not impressed.
If you are using a bonified full featured Android you can grab a really nice reader like this:
Kindles can be hacked to give you full ICS access, but its a pit of a pain and you lose a little functionality.
If you're looking for cheap and effective, I really recommend a Nexus. If you're looking for powerful, I really recommend a Transformer Prime.
My Transformer can litterally play Diablo 3 at full power FLAWLESSLY. I would probably be playing with it more if Diablo 3 had anything resembling an intuitive tablet interface.