Just so you understand the scale of what you're looking at, here's one of the promo Kindle photos:
The circuit board is about the size of a playing card and it only takes up about a third of the case. On that one little board are the buttons, CPU, Wifi, Flash, and everything needed to run the Kindle.
Now I can see why they dropped the card slot*. It was part of Amazon's effort to simplify the design and make it cheaper to produce. That is probably also why the keyboard went away.In comparison, I dug up the teardown photos of the K2 (source) and the original Kindle (source). The K2 has a circuit board that is almost as clean as the K4, while the original Kindle looks like C-3PO vomited into the case.
The little metal panels in the K2 case cover most of the chips in the K2 (CPU, Flash storage, batter controller, etc). As you can see, it has a much improved design over the original and it probably cost a lot less to produce.
*I don't know about you, but I still want a card slot. It wouldn't have cost much to add a microSD card slot. Sure, it would mess with the external profile but as you can see from the lead photo there was room to spare. BTW, the other reason I wanted a card slot is that the K4 ships with only 1.2GB of storage. That's simply not enough, IMO.