Let's do the positives first, and there are many. From a market perspective, Amazon and its customers will benefit from a realistic competitor. Sony's performance in the area has been OK, early entrants like the Cool-ER reader were clunky for downloads and frankly something with books that download as easily as this - it took seconds to get to reading my first chapter - is going to make the competition sharper.
It's smaller and lighter than the Kindle and the touch screen means you can change pages in a more natural-feeling way than the Kindle's buttons. There are no doubt deals with British magazines on the way - I couldn't find any to which I could subscribe just yet.
It's easy once you've set up your account and it's lightweight, comfortable and with no backlit glare. There are apps so you can read Kobo books on different devices at no extra charge. But there are negatives.
Tied to computer
The glorious thing about the Amazon device with 3G is that you can download books on the move - you finish something unexpectedly quickly, or really can't get into something you're reading, that's no problem, it has a little 3G chip so you can start to download something new immediately.
The Kobo needs to be attached to a computer, which downloads the book you want, then it transfers it. This is fine but not as simple as the Kindle.
Also, although the idea of downloading the same book to my iPhone so I can continue reading it if the battery is down or if I've stuffed the reader deep into a bag is appealing, it doesn't appear to sync between devices. Using a technology called Whispersync, my Kindle will tell the iPhone, iPad or computer which page I'd reached so I'm always bookmarked automatically.
On the other hand you're not tied just to Kobo books, you can shop from "open" e-book stores on the net and use your Kobo to read them. Longer term it could be more interesting that the Kobo has social functions. You can read then comment, and spread your thoughts direct from the device - this is something Amazon might want to pick up on, and is just what I meant by people benefiting from this sort of innovation.
The e-reader market is changing. Entrants like Binatone are emerging with the ReadMe Mobile which is effectively an Android tablet with e-reading focus, and the Kobo is more focused with potential to go more social than its competitor.
Overall my guess is that Amazon's going to lead the market for a while, simply because loads of people already buy stuff from the company so they don't have to fiddle around setting up a new account, nor do they have to link to a computer to buy a book. The Kobo, nonetheless, looks like the best competitor so far.