I have owned a Kindle (1stG) since July 2008. I love it. I take it everywhere. I subscribe to the LA Times on it.
My experience is that the people that think the Kindle is stupid are largely people that haven't used it. I absolutely love reading books and the newspaper on it.
First, books... It's lighter than most paperbacks and easier to hold. Lying down, I can hold it with one hand easily for an hour or longer. Without the cover it's even lighter! Sitting at a table, I can eat and read no problem. I no longer have to prop the book open with some heavy object. And, I turn the page with a pinky finger if I like.
I can carry multiple books with me and read them any time. Personally, I'm usually reading at least two books at a given time. One for fun and one for professional development. So, it's awesome to be able to carry those, plus the newspaper in one small package.
I will admit that a lot of times I see a newspaper story that I read on Digg or Newsvine already. But, usually, the Times goes into more depth. There are lots of stories in the Times that I don't find on the web. I have noticed that I read the paper differently than I read the web. I like getting the paper on my Kindle. Personally, I have always read the newspaper in a linear fashion so the formatting on the Kindle doesn't bother. The only thing I wish was that there was a two or three sentence summary of the article in the article view. That way I could easily skip over stories I'm not interested in.
I love that I don't have to feel guilty about tossing the newspaper in the trash/recycling when I'm done with it. Kindles don't kill trees!
I would suggest that people who don't think the Kindle is a really great device might not understand what it's used for and it's advantages because the haven't used on. Kindles are not really for everyone. They are for people that like to read. If you don't like reading books and newspapers and magazines, you will likely not want to spend your money on a Kindle. I'm so happy I have one and I will likely upgrade on the color screens. I like the large format one for textbooks. Anyone that doesn't realize how amazing that is has probably not been to college. If you carry your laptop to class, you are probably taking notes on it. Do you really want to be tabbing back and forth between a pdf and your word processor? Please. Imagine having your textbook open in front of you in a small form factor that doesn't have physical pages you either have to hold down or turn (just button presses!).
Oh, and you can highlight and make notes on the Kindle. The notes are bookmarked and stored. I don't do that, but I know you can.
One really overlooked feature... the dictionary on the Kindle. You can look up a word right in the middle of reading. It's way better than it sounds. People gloss over that all the time and I'm not sure why. I was always too lazy to look up words, I just would guess from context. No more guessing! And, you learn more.
Battery life: because of the eInk, the battery last a really long time. Turn off the whispernet and it will last days without a charge. Laptops last a few hours at best.
I can do all of that and so much more on my iphone. Only difference is battery life.