Yes, with the Kindle Amazon has taken a page from Steve Jobs and Co. and gone the proprietary route. The most "open" e-reader is Sony's. Their E-Reader Touch and Pocket editions handle pdfs, pubs and most other formats (though not the Kindle format, obviously). As others have noted, the problem with any netbook isn't size or even handling, but the screen. The E-ink display of e-readers is softer on the eyes, very much like paper.
I passed on the Kindle for the proprietary issues. The Sony E-reader Pocket is the handiest (and most affordable at $199), but it lacks an SD reader, so you're stuck with the 500MB internal. (Yes, that's still a LOT of books, but I am a professor, and a half a Gig isn't going to cut it). Hopefully the next gen E-Pocket will have expansion capability, since Sony handles pdfs without conversion, unlike Kindle.
The newest on the market is Barnes and Noble's "Nook." Seriously tempting, color and touch screen. Wireless connect, like the Kindle, and about the same price ($259).
But this is about netbooks: Yes, they can be used, but not optimal. ASUS has a capability that can orient the screen to allow the reader to hold it like a book, but I have found the warmth of the machine to be a problem for long reading sessions when I have tried it (hence, my quest for the perfect e-reader).