@Setanta,
I'd imagine there's less overhead -- physical books need to be produced, shipped, stored, and there will never be exactly as many physical books as people who want to buy them. (If there are more people who want them than books, you lose those sales; if there are less people who want them than books, the books molder and give no return on the cost of producing them.)
By contrast, downloads need to be "produced" only once, and probably rather cheaply. Then it's on-demand after that.
I'm agnostic on the whole e-reader issue so far, I've done some reading on the iPod touch and it was OK. I generally prefer real books. Love having real books around the house (as has been discussed a surprising amount of times in the last several months ).