Electronic books are probably one of the iPad's killer apps. Maybe not the ones we'll see immediately -- the ones basically just ported from the Kindle or something -- but the next generation of books, or the ones after that. Interacting with the book is where the technology will really shine. Think about A Young Lady's Illustrated Primer (from The Diamond Age).
Books as a killer app? I don't think that'll be quite enough. Remember that the killer app for the iPod was not the music, but the store to access that music at a reasonable price.
Likewise, the killer app for the iPad has to be much more than just the books, no matter how you dress them up.
Unfortunately for Apple, electronic book stores already exist. And they haven't shown too much promise (yet?). There's no need for an equivalent to iTunes, either (organizing a bookshelf isn't nearly as difficult as a music library).
So, what else can be offered by the iPad? Color? Not good enough.
So, like you said, maybe interactive books: a touch screen opens some opportunities there. But even here I'm skeptical: interactive content is one of the most difficult products to make well. And it's not the sort of thing that Apple can control.
Textbooks, however, might be the key. Here is where an eReader can provide many advantages, even without providing anything more than a basic book. Searching and note-taking, to name a few ... and so, so much more portable. Even at a lower price the publisher makes more money. If it's done right, every student will have one. I would have bought one, for sure (and that's saying something!).
The key, though, is the target demographic. Remember that, at least to general perception, Apple targets the young and hip (or at least those that want to appear young and hip). Literature (in general) has the perception of appealing to the old and intellectual.
Even then, I don't think we've seen what the killer app could be for the iPad or any other eReader. Maybe that's why there's so many skeptics of the lastest Apple product -- and maybe they have a point this time.
