They are planning to do their own e-book thing with the upcoming tablet.
Although for iphone and ipod the apps wouldn't hurt, they probably don't want people getting used to e-books on iphone and ipod before the tablet comes out.... ?
The e-books would kill the battery on the iphone/ipod anyway. Don't think it would work.
Just some ideas, don't shoot me down.
I just downloaded the free Kindle iphone app. I would think that if this were a competitive thing that they would have killed this one off first. Or maybe they're waiting until after the release of this rumored tablet?
I use GoodReader on the iPhone to read some math textbooks that I have in pdf form, and it works great (very legible, navigable, and no problem with battery life)