I had an iPad and it was fine when it was just me using it. When my kid started to get old enough to play games on a tablet I found I wanted something multi-user and with parental controls. I eventually went with the Kindle because of said parental controls. I can leave wireless on and he can do streaming of things without being able to drain my bank account. Let him have the iPad with wireless on and within about 60 seconds he had purchased and downloaded a movie (from flailing about more than from doing it on purpose). While you can lock down an iPad to some extent I found it to be a lot more user friendly and flexible when using the Kindle.
So I think besides the issue(s) that people have talked about already with they bought one and it is still good enough, I think that they are also not really starting to think about families using them. They still want you to buy an iPad for everyone if you secure it which isn't very realistic. Even if the device is 'better' if it is missing something that is crucial to most people they are going to move on. It is suffering from good enough syndrome, cost comparisons, a lack of good multi-user functionality and parental controls far behind their competition.