I actually have a Kindle and seldom use it any more:
http://jseliger.com/2010/04/13/kindle-land-with-requisite-ru... , but as someone with ~1,000 books I can answer:
1) Moving is a pain in the ass, to put it lightly. No, excuse me: to put it heavily. Very, very heavily. Especially cross country, though I've acquired a lot of books since starting grad school.
2) Shelving is expensive.
3) At scale the right book can become harder to find. The other day I spent 15 minutes looking for Tom Perrotta's Election because it wasn't quite where I thought it was.
4) Most of us don't have infinite room and therefore eventually run out of space.
5) Searching is still pretty nice.
That being said, why do I still read paper?
1) The note-taking function on the Kindle sucks ass, and I compulsively fill margins.
2) Page turning is still too slow.
3) I actually flip back and forth between pages quite a bit.
4) I'm not convinced that DRM isn't going to bite me in the ass 1 to 20 years from now.
5) Anachronistic attachment to paper.
6) I'm a grad student, and the citation / edition situation hasn't been sorted out for the Kindle. This is very important when writing academic papers.
Note that I'm not making some kind of moral argument about whether electronic reading is good, bad, or indifferent. To me, it just is. I foresee eventually moving chiefly to electronic reading, but I'm not sure when or how that shift will happen. I'm also not interested in the iPad because I spend enough time staring at LCDs as it is.