iPad. I've used my fiancée's 2nd generation e-Ink Kindle and it's definitely a superior device for novels.
But just as my smart phone has largely replaced my camera and GPS and iPod, despite being a somewhat poorer device for those dedicated functions, so the iPad is the "better" option for me, because it's also a viable "all in one" device for web browsing, email, light business work, etc..
One-device convenience and "good enough" eBook functionality trumps a better dedicated device sufficiently often to make the decision easy.