Reading e-books is a niche, and I don't understand your workflow.
how would a slightly bigger screen (Nokia N8x0) compete with something like a Kindle or a netbook?
Do you think that the general public will consider a device with a screen like Nokia N8x0 with a device with a screen like a Kindle for reading?
You could on Nokia N900 use an external screen instead. The power of a device like this lies in being easily able to extend its features (e.g. synchronisation, UPnP, USB).