To my mind, the single biggest flaw of the Kindle may be summed up in a single word: typography.
The Kindle has one typeface, which means that very page of every book looks precisely the same. (See nadezhda's correction, and helpful further information, in the comments below.) For me, the design of a book resides principally in its typography, in the way the text is set on the page. In my own history as a writer, I feel that I have been fortunate in the covers of my books — with the glaring exception of The Narnian, whose cover I despise but over which I had no say — but not so fortunate in what really matters to me, the typographic design. Only my most recent book, Original Sin: a Cultural History, really looks good on the page to me.
In general it’s probably best that authors don't have much say in such matters. Some years ago Douglas Hofstadter published a book, Le Ton Beau De Marot: In Praise Of The Music Of Language, which, he proudly asserted, he designed himself all the way down to the layout of each page. It’s an absolute nightmare. I’ve never seen a book by a major publisher whose typography was so appallingly inept. And maybe I wouldn't do any better — but oh, how I would love to work with a skilled designer to help any books I write from now on look as good as possible.
Anyway, I very much look forward to the day when books on the Kindle are actually designed, when each of them has a distinct and carefully-wrought appearance. Then each book will feel more like a book, more like a thing unto itself, not just digits running across a screen.