I like both apps but. . .
I like Ibooks because: it is prettier, shows facing pages in landscape mode, offers fast search capabilities.
I like Kindle because: it has a much larger selection of titles, books can be read on Iphone/Touch (yeah, I know this is coming to Ibooks with next OS upgrade) and you can insert notes.
I think the lack of note-taking/markups in Ibooks is a big negative mark against Ibooks. I'm one of those people who mark the hell out of printed books. I use margin comments to argue with the author and also have my own idiosyncratic highlighting system (using marks to label passages as "very important", "critically significant", "summary", etc. With these markings, I can pull a book off my shelf that I last read 30 years ago (yeah, I'm an old fart) and within 15-20 minutes bring myself up to speed on all the critical arguments and central points of the book.
The thing is, with a few minor software changes, both Ibooks and Kindle could do the same thing in magnificent style! They both already have a highlight/notes/summary page. However, your highlighting is only shown in truncated form. What I would like to see is this hightlighting/notes page show the full text that you have highlighted and that you can review in it's entirety without having to jump to the page featuring this same text.
This would be especially useful for folks in college cramming (er, uhh, "reviewing") their course materials for a mid-term or final exam. In one spot you would have all the critical (marked-up) material assembled for each book. I would have loved to have had such a tool before going into the classroom and writing my responses in those dreaded "blue books" (do they still use those anymore?)
I sum. I love e-books on the Ipad. The apps just need a bit of tweaking to bring out the full power the the medium.