I have to admit, the idea sounded weird and bad when I first heard, but now I’m somewhat intrigued.
Personally, I might find it hard to read a book without being able to stick random post-its in (I’ve tried to stop doing margin notes to preserve the beauty of books, but that, too …). I also like the idea of curling up on a couch with a non-electronic and just … well, reading. This is too reminiscent of my “work” – typing, reading things off the computer, just using the computer.
In any case, I wouldn’t be surprised if, within 5 years, there’s some gigantic iPod/iPhone/iBook/iMac combination that isn’t bigger than a 4×6 index card, and not much less affordable than coffee and gas (… my point being, these items are quite expensive now, and people will buy them nonetheless).