I read between 20 and 30 books a year, almost all of them fiction for entertainment. i don't have a kindle or other e-reader.
i think amazon messed up big time. they don't have a robust review system in place, so something was published as an e-book without the actual rightsholders permission. The terms of service also suggest that a purchase is permanent. Should amazon have removed the books from people's kindle libraries? No. Should they be able to? No. With all the hullabaloo over this, i think amazon gets it.
From the coverage on Ars Technica:
The company told Ars that they are "changing [Amazon's] systems so that in the future we will not remove books from customers' devices in these circumstances."
That ars article is posted at:
http://arstechnica.com/tech-policy/news/2009/07/amazon-sold-pirated-books-raided-some-kindles.ars