Count me as one who owns both. For me, and ebook reading, nothing beats the Kindle. Compared to other e-ink devices, the display is more crisp.
Also, when reading outside, the Kindle is far superior to the iPad (I read as often as possible on my deck). Unfortunately, I live in Minnesota; there is only so much time to read outside.
Currently, I own the Kindle 3. So far, it is the best Kindle: better contrast, faster refresh, smaller and lighter, easier to hold. Yes, while reading, I hold my Kindle. When reading my iPad, often, I rest it on my lap or something similar.
For either nighttime or low-light reading, get a Mighty Bright light. When using it, I have a Marware case that I use to clip the light to. To ensure that you don't get the light glare, you just have to angle the bendable neck; it works great.
In a month or so, Amazon is probably (like the iPhone 5 rumors- however, someone from Techcrunch has actually used it) going to release a new version. It may be a lot more than an ereader; it could be more like an iPad, and hence, maybe more than you are looking for. Even so, the other Kindles could easily drop in price. Ask yourself if a dedicated ereader is your desire? If so, would saving $15-$20 (?) and not having one for a month or so be worth it? Also, on ebay, Kindles have a good resale value. So, even if a new one is released and you preferred it, you could sell your current model and not lose too much.