on another Note i wonder how this will hurt Kindle Sales.
I can't really see this hurting Kindle sales because Kindle sales are already down in the dumps to begin with. They only sold about 200,000 of the first generation and the 2G doesn't really add that much besides memory. I'm sure they would sell a lot more if they dropped the price by half - I definitely would buy one.
So, if anything, this is just likely going to boost books sold by Amazon. Some websites sell ebooks the same price as physical hardcovers. I don't see how they can do this because it definitely costs money to print physical books. If you cut that part out, shouldn't the price drop (instead of their profits going up)? $9.99 for books seems a lot more reasonable.
As for people quick to shoot down reading ebooks on their iPhone, please give it a try. I was the same way at first, I didn't want to try. However, I find that you can read in the dark, which is a big plus for people in bed with spouses and trying to read. All you do is invert the colors; white words on a black background. And don't use a reading program that makes you scroll pages - it's too hard because you have to use 2 hands then. Use a program where you can tape the side of the screen to advance the page (like Stanza).