We each have a Sony eReader. A bit of a pain to work out, but they are great for reading books. Great in the sun (sitting on the beach etc), no good in the dark unless you have the cover with inbuilt led light or background light.
Prefer a book , but the Sony eReader is very good, just don't get caught placing a bookmark under the reader cover
Have an iPad but prefer to use the eReader for books. With a tablet, no good in sunlight, but good at night. Opposite with eReader.
If you are thinking of a 7" tablet, the new Google Nexus 7 2 is expected to be released in the next 3 to 6 weeks. Looks like a real nice device.
Again, horses for courses.
Ed: the Project Gutenburg books can be read on eReaders or tablets. Free on either, but I doubt there will be many of those you will read.
As mentioned by others, the battery life on an eReader is great. Not so good on a tablet.
The Salvo shops have cheap books (paper style) that youcan put back into the Salvo system when finished. We usually buy a few from a Salvo shop and donate back to another Salvo when finished and buy a few more. The Sallies and their 'real customers' benefit, and the books are cheap!
You need light to read a paper book as well as you do with an eReader.