Whenever Amazon announces news about it's Kindle product, like with the recent Kindle price drop, I find myself referring to my reasons for not buying a Kindle. So far they are working out pretty well for me. The strongest argument has been the inability to share (first on the list). When I buy a physical book, which is usually not much more expensive than the digital version, I don't just buy the ability read the book myself. I am also buying something that I can share with others. Frequently I mention a book to someone and grab my copy to lend. And roughly half of the books that I read are on loan from others. You don't get this experience from a digital book and I would miss it.
Personally, I would reconsider my decision not to buy a Kindle if it had a "lend" feature. Here is how it would work. If I owned a digital copy of a book, I could click a "lend" button that would bring up a list of my friends. I would be able to set the length of the loan. During that period, the lendee would have access to the book but I would not. As the owner of the book, I could retrieve the book and, in doing so, remove it from the lendee's library. This feature could also be enabled for public and academic libraries.
This move would be great for Amazon (or a competitor that did it first). It would encourage people to buy the reader device when their friends buy one. It makes the reader more valuable and viral. It would alleviate feature/function competition. You would buy the reader your friends have, not the flashiest product with the best C|Net review. Publisher's would probably not be so keen on the idea. They would see fewer eBook sales. I think this issue could be addressed by Amazon increasing the digital copy price and sharing more revenue with the publisher. For reference books and classics, the publisher could see sales to people who borrowed the book but wanted their own copy.
This reminds me of Kevin Kelly's classic post "Better than Free," where he lists characteristics of content that make it worth paying for. One of the characteristics is "Embodiment," which digital content lacks. Making a digital edition virtually transferable (and not copyable) would certainly add embodiment because it would make it behave more like a physical asset.
Amazon (or any other digital reader maker): please steal this idea (if you haven't already thought of it yourself). I would really like to see lending digital content happen.