The author isn't getting paid twice, exactly.
In a typical (though probably oversimplified for sake of argument) royalty publishing situation, the author gets paid an agreed-upon amount for writing the book. Then he or she gets a royalty payment for every unit sold. So that lump payment at the beginning only comes once, and every unit (be it audio, print, braille, skywriting, whatever) generates another very small royalty payment for the author. It's not really a double-pay situation like you're suggesting.
As for the company selling the audio version (whether generated or recorded) making money, don't you think the price of the TTS function is rolled into the price of the Kindle? Amazon is a great many things, good and bad, but they're not the type to sell something without being deeply aware of a) its inherent value and b) its practical value (where the top edge of what a consumer will pay for it is). Lots of people wanted TTS on the Kindle, so they added it to this version. If lots of people ask for it and it's not included in the new device, those people will expect to pay a little less. So Amazon is making money by selling the TTS feature, even if it's just rolled into the total price.
(My argument is weakened in this particular case as there is a large segment of the population that will buy a Kindle for whatever price it's sold for [within reason], and there's no real industry standard price yet for this type of device. Still, bear with me.)
No, the quality isn't the same as an audiobook. And no, the ultimate money-making potential of the lumped-in cost of the TTS feature doesn't equal that of selling a totally separate audiobook. But I think the Authors' Guild makes a valid point in that whether it's a penny or a dollar, Amazon has started selling existing content in a different form (call it audiobook or call it something else, it's louder than a paperback book and I can use it in the dark) without compensation for the author. Whether you think it's a source of financial ruin for authors or just the principle of the thing, both seem to me to be valid reasons to insist that Amazon not be so cavalier about it.