Correction: It's a crappy tablet. Yes, it's cheaper than an iPad. So is a hooker. And the hooker has more features than the Kindle Fire.
Consider that HP is about to do a 2nd production run of the TouchPad, and those were going for $99 with 16GB storage, a 9-inch screen, and have the Amazon Reader app built into the OS. And you can set them up with a dualboot config of webOS and Android.*
*Disclaimers: Yeah, I work for HP. I generally hate our products. But I was honestly, pleasantly surprised with the TouchPad. It's a good device that didn't get a fighting chance. And we lost umpteen million dollars by selling them at firesale prices. If anyone's wondering why on Earth we'd do another production run when we lose money on them, it's because HP was contractually obligated to its suppliers to purchase X number of screens, processors, cases, etc. So they figured they might as well just go ahead and make another big batch to flush the components out of the supply chain. No idea if they're gonna keep the price at $99, given the crazy levels of demand that created.
EDIT: I should also add that with the Kindle Fire, you get no GPS, no Bluetooth, no camera, no 3G, and even the version of Android it's running is a custom build that forces you to buy your apps through Amazon instead of the larger Android Market. Essentially the Fire and the Nook are creating a seperate tier of "e-viewer" that's well below a full-fledged tabet.
Meanwhile, Asus is getting into the market with its new Android-based "Eee Pad Transformer Prime". Goofy name, but it's got some beefy specs. 10-inch screen, slightly smaller profile than the iPad 2, 1280x800 resolution, comes with 32GB or 64GB storage, a gig of RAM, and sports the first quad-core processor in a tablet to date. And a pricepoint around $500-600. Could be the first serious threat to the iPad for people looking for something comparable but not tied to Apple.