A couple days ago I posted on WorldReader.org and their Kindle pilot program. They're working to create rural literacy programs in third world countries.
I took the position that paper would be a better solution, and I still think that.
Yesterday I came across a post on the OLPC News blog about the efforts needed to keep large quantities of the XO-1 laptop maintained and functioning. Admittedly, this is a laptop, not an ereader, but this isn't a problem you'd have with paper books.
According to an official report which received quite a bit of media attention last week 14,2% of the XOs in 275 surveyed classes at 55 different schools (out of more than 2000 schools participating in Plan Ceibal) where unusable due to some form of breakage. An additional 6,2% of XOs was currently undergoing repairs and hence unavailable for the children. Together with machines blocked by the security system or a full Journal (3,9%) and ones where the state was either unknown or something else (3,1%) this means that 27,4% of the XOs weren't in a usable state.