However, on further reflection, I think that the pricing battle is merely the prelude to Armageddon. What to charge for an ebook is really merely a question of the economics of shifting book publication from print distribution to digital. That question may result in upheaval and consternation in publishing circles, but the ebook itself is— in spite of what print-book fans insist in their moaning about the smell of old books— merely the text (and sometimes illustrations) translated to the screen (whether e-ink, as on a Kindle, Nook, or Sony, or LCD as on an iPhone/iTouch). The ebook is still a book.
What the iPad does is open up the door to radically change books themselves from words on paper(e-paper or plain paper) to something else entirely. A first step might be to add "extras" such as video interviews with the author, rather like a DVD of a movie might have director's comments. Publishers might see this as a way to generate more revenue, in the belief that it makes the ebook more valuable. Whether or not that would help is debatable. It seems to me that DVDs are moving away from that model, except in the case of blockbuster movies like STAR WARS or LORD OF THE RINGS.
Random House has already started a program offering enhanced ebooks that include online games (for kids' books) and graphic novel versions of adult titles. These offerings are reached via a browser, which means that probably they will work on an iPad. The vook from Simon and Schuster takes things a step farther and intergrates video with text narrrrative. The reader opens the vook through his browser, and reads the story until he is directed to the first video segment. He watches that and then returns to the text. I don't have any info on how they're doing, but they since you experience the vook on an internet enabled PC, I see them as prime iPad fodder. After all, Steve Jobs is actually quoted as say, "People don't read anymore" (although he is cooperating on a biography, so maybe he thinks they just need an interesting book.)
The question is, how far down this path can publishers go before the book as we know it becomes lost? If you can sell a text-only ebook for $10 max, and a vook for $20, will publishers sell out for the revenue? The day might well come when Project Gutenberg and "indie authors" (formerly known as self-published authors) are the primary source for plain old books. Wouldn't that be a kick in the slush pile!
[Addendum to my original post: this post eagerly looking forward to the expansion of ebooks sounds more enthusiastic about the topic than I feel.]