To get to the heart of Kindle - iPad issue we need to understand that there are two kinds of books. One kind of book is what I will call "page turners". You start reading the book at page 1 and read sequentially turning the pages until you get to the end. The other type of book I will call "reference". You start reading the book by going to the index or the page of contents, finding the topic you are interested in and proceeding from there. Books such as dictionaries and encyclopedias are organized as indexes to make look up easier.
Of course, nothing is ever completely black and white. There are plenty of books that fall between the two poles of page turners and reference books. For example, a book of poems may be organized to be read as a page turner, however it will also contain an index of poems and perhaps an index of first lines. Many technical books are written as both a page turner and a reference. Perhaps on first encounter you read it cover to cover and then use it as a reference book. The way we read magazines and newspapers is more like a reference book than a page turner. In a magazine we look at the index to find the article we want to read, or flip through the pages to find something eye catching. Scanning a newspaper is a similar act.
The point of all this is that the Kindle book reader is a device that is optimized for reading page turners. Navigation is difficult. While the Kindle in theory can be used to read newspapers and magazines, it has not been very successful in this application. The iPad on the other hand has all the touch based navigation mechanisms and also the advantages of the web like hypertext and search engines.
In summary the Kindle is a gadget for reading a specific type of book and nothing else. As such is is effective and well received by dedicated readers of page turner books, a small but devoted audience. The Kindle is limited by its niche. The iPad is a much more general device that does book reading as one of its many functions. Better navigation and the display means that it can be used to consume all media types, and it is particularly good for navigation heavy media such as newspapers and magazines and reference material.