There's also a world outside the USA ;), although I agree that the Kindle is not the ultimate book reader. Then again none of the services offered by Apple on movies, TV series and music are "ultimate" by my definition of culture freedom :P
I'm sure Apple will be witnessing the experiment with attention to see if it's worthwile to release something. And THEN book readers will be as hip as the iPhone right now (and as expensive, of course ;D)
In addition, Steve Jobs seems to forget that people reads more than it seems, just not books.