Readability—from what I hear, the Sony e-reader or maybe the iLiad would come in first one this one.
Convenience/usability—how much work is it to get the e-books onto your reader and what can you get? Kindle has a head start on this one, since it's wireless and hooked into Amazon.
Convenience/portability—how much trouble is it to lug the thing around? Well, if it's your phone, you're already lugging it around, so iPhones and similar devices have the edge there.
Today's GalleyCat post quotes a survey reported in Forbes that says the software that makes an iPhone into an e-reader has surpassed the Kindle. So it looks like maybe that factor trumps the others?
I was going to add price, but it seems to me if you already bought the phone and all you have to buy is an app, iPhone would win at that, too.