The iPad's screen is horrible. That's my only complaint and why I haven't blown any money on one yet. It just doesn't look that great compared to a MacBook Pro's, iMac's, or even an iPhone's screen. The new iPad's doesn't make a difference, it's still as bad as the last ones. I have seen them numerous times in person too and it just blows my mind at how awful they are.
The Kindle Fire has a great screen. If the iPad had that screen, plus the Retina aspects of it, it would be so much better. Like 1,000,000x better even.
Most people returning the Kindle Fire is simply because they have no idea about Android in the first place, don't know that it lacks in selection, and were only tempted by its price tag and refused to deal with Amazon's ecosystem which the device was designed for. It is the nicest Android tablet out there when you consider that the others are piled with horrible TouchWiz and other horrible OEM junk. Amazon includes very, very nice bloatware like Facebook, IMDB, QuickOffice, ComiXology, and it's own stuff, and that's about it.
Having ICS on it just makes it even better for those that can handle custom ROMS and kernels.
Software wise, iOS just kicks every Android product of course, but it's getting better. Flipboard will be awesome on a 7" screen once it's out.