I've had a Cool-ER e-reader for about a year now and it was well worth the money. I've used it for both entertainment and studying and have found it to be fantastic for both. However, I am not the kind of person who makes notes in books. If I was, then I can see how it would be annoying to have that basic function taken away.
Searching through a volume should be easier on an e-reader than a normal book. In fact, it is. The space I am saving by having around 120 books (and room for more) on my reader rather than in my study is more than worth it. Plus the millions of out of copyright books, completely freely available books on the internet have actually saved me money, even when you take into account the initial £180 for the device.
The iPad - I'm not a lover of the thing but surely the limitations in the article can be overcome by some clever software, and I'll bet that Apple have the intuitiveness to do it.