An eReader is an electronic reading device on which you can read electronic books. Depending upon the memory of your chosen device, you can carry a couple hundred books with you in a device that weighs no more than 18 oz and with some devices as little as 9 oz.
Why should you purchase a gadget just for reading ebooks when you have your Palm, iTouch or other multi-purpose device? That is a decision for you to make.
The screen is much larger on dedicated eReaders - so it's easier to read on an eReader than on a PDA or phone. In many cases it can hold more books because it is only for reading eBooks. For me, it feels just like reading a paperback book!
My daughter told me she wasn't interested in an eReader or eBooks. She said she'd miss the feel of a "real book". She changed her mind about in about 10 seconds after reading a book on my eReader!