For my birthday this past year, I got a Kindle. I wasn't sure how much I would use it since I'm addicted to the library, but I can honestly say I use it every day. Even I'm surprised at how much I love it!
For Christmas, my 5-year-old daughter got a Vtech e-reader (which was way harder for me to figure out than the Kindle!). She opened it and yelled, "A Kindle! It's just like mom's!" She absolutely loves her e-reader and has already gone through a set of batteries in less than a week.
Although the electronic devices are fun and there's an obvious place for them in today's market, they still don't take place of reading an actual book. I still check-out books from the library, and my daughter still insists on reading books every night.
Last night after my daughter turned off her e-reader she asked, "Can we read a real book now?" Now THAT was a proud moment for me.