RE: reading books while underwater
I think you really have your finger on the pulse of the market. Clearly, paper books will lock up the tremendous scuba reading segment.
Humor noted, but the broader point is the differences in the technologies for their compatibility to potentially hostile environments.
Key question here is the owner's willingness to risk an expensive device that has a catastrophic failure mode versus a cheap device that doesn't have as ugly of a crash?
As such, while the eBook might open some doors, it isn't without its trade-offs that close others. FWIW, in addition to environmental hazards of rain, let's not forget beach sand, suntan lotion and heat soak (sunny beach, or inside a parked automobile in the summer) as well as simply being dropped. These environments are killing off a good number of latptops, cellphones and digital cameras each year.
But the Kindle is solving a problem. The problem being the acquisition, transport and storage of large numbers of books.
It does, but also doesn't, solve these things.
Acquisiton: costs are the same (to higher), depending on retention criteria.
Transport: yes, you can transport more per unit mass/volume. However, how frequent/common is the need to simultaneously transport more than just a few? And when there is such a need, is it relegated to a particular niche? For example, as a student, I would have loved to have had a Kindle replace having to carry 3-4 big textbooks at once. However, if college textbooks aren't commercially available in e-form (and capable of being notated), then the technology isn't really able to be leveraged.
Storage: while technologically more compact, is it as survivable? Specifically, how many of us make adequate redundant backups of our hard drives now?

In any event, this assumes that the eBook is going to be kept ad-infinitum after purchase, and not taken down to the used book store to recoup storage space
AND part of its original purchase price.
I'm speaking realistically. The average person is not going to read 5 novels in even 2 months.
Pragmatically, the only time that I'm carrying more than 2-3 books is:
a) On my way home from the bookstore
b) Packing for a vacation.
c) Transporting technical material for business (previously: a stack of textbooks in school)
For (b), we often pack our books "one way", giving them away to people we meet en route, which lightens our luggage for the return trip home (room for souveniers, if applicable).
For (c), this is similar to what I mentioned above with school textbooks: the more specialized source material, the less likely it is to be digitized, etc.
I think in the end, most of the complaints about the Kindle come down to one thing: the price.
I would say "Value", although these are very similar things ... and FWIW, I don't have an iPhone for the same reason.
The only way that it would appear to me that the Kindle is a good financial value is for the reader who routinely buys all New York Times bestsellers as soon as they become available ... but who actually follows-through and reads all of their purchases promptly, before the first run hardbacks go on discount. Afterwords, they have to then place that volume in their library or otherwise give away / lose the book without recovering any of its residual value.
-hh