If they want to provide us with their Kindle store, which 99% of the time is excellent and wonderful (I just got the Kindle iPhone app and I love that it syncs with my Kindle and with the web reader), they have to deal with publishers that are antique and ignorant and full of themselves. Think the RIAA is tyrannical? The publishing industry is ten times worse.
It sucks that Amazon had to do this, but given a choice between a terrific store that's subject to the whims of publishers and no store at all, I'll take the terrific store, and hope that my Shakespeare and Austen remain intact.
Amazon is one of the few companies that I trust almost wholeheartedly. I don't think they're fuck-something-up-proof, but I believe firmly that the company as a whole cares about its users and about giving them the best experience possible, even when it's at cost to them. I've never had a bad experience with Amazon, whether it was as a customer or as a seller. I understand the kneejerk impulse here, which is to call Amazon an Evil Big Corporation, but I find it sad that a decade of building trust can be so quickly thrown out the door.