The amazon kindle and Apple’s ipad are two very different devices, yet they are locked in a one-on-one battle for the wallets of content consumers, and it’s not yet clear if the market is big enough for both of them.

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While most readers still opt for paperbacks and hardcovers, digital reading devices have become a common companion for tech-savvy literary types, and they are growing in popularity every day. The first generation amazon kindle debuted in November 2007, and it sold out in five and a half hours.

Including the Kindle 2 and larger-sized Kindle DX, Amazon has reportedly sold around 3 million Kindles as of May 2010 (exact figures have not been released), and it’s easy to see why the device is so popular.

The Kindle’s backlight-less, electronic ink display is remarkably easy on the eyes, text size can be adjusted with a couple of clicks, and the Kindle’s built-in dictionary lets users find the definition of any word simply by scrolling over it. The amazon kindle store is another big draw, giving users the ability to download books, magazines and newspapers in a minute or less over a 3g connection, which also allows free Internet access, albeit through a limited, text-based browser.

For a while, it seemed that the Kindle’s only competition would come from the Sony Reader and Barnes & Noble Nook. Then along came Apple’s ipad in April 2010.

Few people would argue that the ipad is a better reading device than the Kindle. It’s heavier, making it more difficult to read in bed, and the backlight display stresses the eyes. But some analysts are asking whether the ipad is a “Kindle killer” because it does so much more than store digital books. If a user wants one device for a plane ride, will the user choose an amazing book reader, or an average book reader that happens to do many other things incredibly well?

If you want the best digital reading experience, the Kindle is probably your best bet. But if you want only one device and enjoy multiple diversions – reading, Web browsing, movies and games – the ipad is the better fit.

Both Amazon and apple have courted controversy with their tablets. In an Orwellian moment, Amazon remotely deleted Orwell’s 1984 and Animal Farm from the Kindles of users who had purchased digital copies of the books. apple has earned criticism by removing “adult-themed” apps from the iTunes App Store, restricting iPhone access to AT&T users, and the ipad has even been banned from Yankee Stadium under a no-laptops rule.

The ipad has undeniably generated more media buzz recently than the Kindle, but Amazon is not sitting still.

Amazon CEO Jeff Bezos says the Kindle will remain a dedicated e-reader, but Amazon recently purchased a company called Touchco which makes multi-touch technology, perhaps suggesting that future versions of the Kindle will contain some iPad-like capabilities. Amazon has even built Kindle software apps specifically for the iPhone and ipad, and it has another in the works for Android phones.

In the long run, apple will likely upgrade the reading capabilities of the ipad, and Amazon may decide to make the Kindle a truly multimedia device, if it can be done without ruining the reading experience.

The Kindle and ipad should both be financial successes. But competition between the two will only get fiercer as the market for e-readers and tablet computers heats up.