Unfortunately, people will believe whatever they choose to believe. I can tell you how much I love my Kindle, and how much use I get out of it, despite having it given to me as a gift (all of this is true), and you'll still believe it's because I'm trying to justify it if you choose to. This is true about everything else in life, you have to choose if you believe people at their face value or not. It's up to you.
That said, I really do love mine. I have the original Kindle, not the 2, nor the DX. Due to not being close to any libraries my reading over the years had started to slow down. Getting a Kindle really "rekindled" my reading experience, and I'm back to losing sleep due to staying up reading too long.
However, it's not for everyone, nor for every use. My thoughts when I heard they were going to try to push it for textbooks were along these lines: "Man I wish I could have used an E-Reader to carry around all my books, but this isn't the device."
The Kindle is absolutely wonderful for reading novels, even more for entire series. If I want to read something front-to-back, the Kindle is my device of choice. I can generally fit it in my pocket, go read in the park, on the porch, plane, wherever.
But using it as a replacement for textbooks? I generally wasn't very demanding of my textbooks in college. I didn't write in them, didn't do very much dogearing, etc. Hell, I would find the section the teacher was in and read straight through it once or twice and then be done. Seems like it'd be a good fit for the Kindle, but I just can't see it as easy to flip through.
Additionally, there are some people who just won't be able to "get" it. My brother took a look at it and immediately focused on it's (poor) internet capabilities rather than it's primary usage. It'd be worthless to someone like him.
Bottom line, it's mainly for people who enjoy lots of reading, and for flipping through a book of text in a linear fashion. It can do other things, but there are other devices that can do those things better. I don't get why Amazon's surprised that this went over like a lead balloon with many students...