Amazon released "Kindle" for the iPhone/iPod Touch. Kindle is both the hardware and the software at Amazon - a reader with cellular service on one hand and access to the Amazon marketplace on the other. Amazon decoupled them and wrote an app for iPhone - a screen with a cellular connection. Voila.
Why did I get it? My iPod is not a perfect e-Reader, being that it has a backlit screen rather than a reader's e-Ink. On the other hand, I don't plan to read books on the thing, but I bought it in part to replace the stacks of printouts I was making so I could read articles on my way to or from the office. So I use my iPod about 20-25% of the time as a "light reader."
Of course, that still doesn't tell you why I got Kindle. First, it was free, so why the heck not. Second, it has a preview function. A-ha! There are a lot of books I *might* want to read. I'd certainly know more if I could read the first chapter. Kindle provides just that. So now I download a chapter. If the writer has gripped me, I can go get the rest of the book, most likely on paper.