Is it better than an iPad? It's clearly cheaper. It's also lighter (413 grams as compared to 601 grams). A big issue is the clarity of the screen. The iPad is excellent. The Kindle Fire isn't out yet, so we'll see. You can use your Amazon Prime membership to stream a lot of movies and TV, so that's pretty cool.
ADDED: Coketown says:
I believe both the iPad and Kindle Fire use IPS panels so color, viewing angles, and contrast should be similar. Kindle's resolution is 1024x600 on a 7" screen while iPad's is 1024x768 on a 9.7" screen, so it seems the Kindle has higher pixel density which usually results in sharper images. But rumor has it that Apple will be using retina displays in the iPad 3.I use my iPad for reading in a chair or in bed. I have a desktop and a laptop which I prefer for the many long hours I put in every day reading and writing. But I switch to the iPad when I need to get comfortable and rest my head. So the size and weight matter very much. I can't really picture getting a Kindle Fire when I already have an iPad, but if I needed a device in this niche, I'd probably go for this new, cheaper device. By the way, I use the Kindle app in my iPad (and on my other computers), and I'm very happy with the format.
Weight and size make me favor the Kindle Fire. As a media device, the iPad is too big. I prefer a smaller form factor.
ADDED: The NYT report:
... Amazon has an ace up its sleeve that other tablet makers do not, in that the Kindle Fire will offer Amazon’s full spread of digital content, said Michael Gartenberg, an analyst with Gartner who follows the consumer electronics industry.
“Amazon has already nailed the hardest part of the equation: the content,” he said.