As this article from AP  states, Amazon's Kindle has revitalized eBooks. Sales are up for eBooks, including downloads for Sony's Reader. I reviewed the first version of the Reader, and found it to be a great device with a few small drawbacks. From what I have seen of the second version of the Reader and the Kindle, they have improved over that launch model.
Both Amazon and Sony are trying to create an iPod + iTunes situation with their devices and their eBook stores. And this model seems likes one that should work perfectly. I am dying to get an eBook reader myself. But not when they cost this much. Sony's Reader MSRP is $299, but can be found online closer to $250. Amazon's Kindle is $399, that extra cost being reflected in a keyboard and internet access.
When readers hit the $199 to $149 price I think their popularity will increase. But a dramatic shift from being a geeky niche to a full-blown market won't happen until eBook devices hit $99 or less. When the iPod launched, people were paying $99 to $199 for a portable CD player. By the time the price of the iPod sunk below $300 it began to make the cross over from hipster design-gadget to mainstream device. The iPod Mini, and Nano, cemented that transition. But people aren't currently paying $199 to use books so the option of paying $299 to read novels isn't an attractive choice. But a $99 device that is convenient and allows you to read eBooks at a fraction of the price of a paperback seems reasonable.
I see a future where consumers are carrying around affordable eBook readers. I want to have a way to carry encyclopedias, dictionaries, a few unread novels, a set of my favorite books, magazines and newspapers all at once. The company that can give me this at $99 will dominate a new market with Apple-like success. It may not happen for three or four years, but I'm patient.
What do you think needs to happen for eBook devices and the eBook market to become mainstream?