$399 is still too high to move me from $199 kindle option.
I have one Ipad2 and a pair of kindle fires.
Although I am actually more than impressed with the Kindle's performance, I would have preferred to keep everything on the apple eco-system - but it's not turned out to be that big of a deal. An extra $2 spent re-purchasing a couple angry birds didn't hurt as much as I thought it would.
Also interestingly, when given the choice my kids (the Kindle users) pick the kindly over the ipad they are familiar with EVERY time.
There only reason - screen size - The iPad's way too big, the ipod touch is t0o small, the Kindle (for them & Goldilocks) is just right.
We know the mighty Steve

said no to a smaller sized ipad - but I think many, many Kindle buyers are disagreeing with their wallets and are happy with the outcome.
I think a 7 or 8 inch iPad would have been the perfect device for kids (especially with their small fingers). I got my kids iPod Touches for Christmas and they love them, but I would like them to have something bigger when reading iBooks. One problem I have with the Kindle Fire is that you cannot turn off one-click purchasing when letting your kids use the device. Other issues I have with the Fire are listed in
this fantastic chart by Marco Arment. I found this chart especially amusing since some of Amazon's marketplace sellers actually sell the iPad, and any search for iPad was ranking an "iPad 2 versus Kindle Fire" comparison chart at the top of the search results -- not very cool.
Personally, I use my iPad for much more than Angry Birds and reading books so the Fire would never be the device for me. In fact if I was the content-consumption target customer of the Kindle Fire then I likely would never have purchased an iPad at all since it would not have been worth the cost. Here is my general take on the Fire:
1) Book Reading: eInk on standard Kindle's is easier on the eyes. Amazon's Kindle App for Android and iOS is currently better than the Fire's app. But reading books is likely one of the best uses of the Kindle Fire.
2) Magazine Reading: Kindle Fire is a bit too small (though clearly larger than an iPod Touch and cheaper than an iPad)
3) Movies: At home I use my television for movies. On the go, I need to be able to sync movies to the device. Amazon's 6GB of usable space does not cut it.
4) Music: Tablets are not for music.... iPods (or iPhones) are for music.
5) Web Surfing: Kindle Fire should do well here, but the screen size is a struggle since full-blown websites are cramped and mobile websites look too large. This will only improve when websites start targeting the 7-inch tablet screen size as a supported format. Currently, this is best done on an iPad.
6) Games: The iPhone and iPod Touch are far superior here for mobile gaming.
7) Apps: Not enough available except for the most basic favorites.
All in all, I think Amazon's next entry in the "Kindle Tablet" market will be the one to watch since the Fire was kinda rushed to market for Christmas.