The Ipad is a great e-reader. In most circumstances the books look way better than on a Kindle (e.g. the way pages turn in IBooks). There are more books available (Ibooks, Nook, Kindle, and many other reading apps give you tons of options that the Kindle doesn't have). Plus, there are many, many types of publications that you just won't or can't read on the Kindle (magazines in print format, books like with pictures like art, cooking, home improvement books, comic books, most children's books, books with integrated video). And, of course, you get everything else an Ipad does.
The Kindle does have some advantages: lighter, $350 cheaper, less glare.
I firmly believe that even if you think you just want an e-reader, once you have an Ipad you'll use it for tons of other functions. Thus, the Ipad, while pricier, is a much better value. Thus, unless the extra $$ hurts or you will frequently be reading standing (weight issue) or outdoors (glare), by an Ipad without a second thought