I agree that you need to figure out exactly what you want to do with the product. Each of these items has its own strengths, and since they're expensive you want to choose wisely!
I have had the Kindle (2nd generation, which is no longer made) for years and years, and I absolutely love it. If you want to read books, you cannot beat it. Its screen is superior to anything else out there; no glare, no eye strain even after hours of reading. If you want it to read books, the lack of color is not a deterant; after all, most adult books are simply just black and white. I do have a couple games on my Kindle, but they're slow and definitely not first-rate. Finally, the Kindle's price is right.
I also have the Apple iPad. It's good for the internet and games -- good speed, good graphics -- but it's not so good for typing. It's not so good for reading books; the screen has a significant glare, and it weighs maybe three times what the Kindle weighs (and that does add up if you're a lie-on-your-back-reader who holds the thing up for hours at a time). Of course, you can get movies, a calculator, and other niceties. Compared to the Kindle, the battery life is nothing. Compared to the Kindle, the price is high. My kids use my Ipad constantly.
These two things aren't in the same category. If I personally could only have one, it'd be the Kindle. I read every single day, and it suits my purposes perfectly. My Ipad is handy, but it can't do everything my computer can do.