Reading with a Kindle, the signal is relatively constant and, at the moment, is something like "I'm an early technology adopter and I like to read". As the Kindle gets more commonplace the efficacy of this signal will, I think, diminish. Compare this with the signalling effects of reading a traditional book, where you signal to people not only that you like to read, but crucially what you are reading.
I don't have a Kindle, but I think the anonymity of reading with the Kindle would be appealing. One of my pet peeves is people interrupting my reading in public to inquire about the book in my hands. I generally don't carry books just to avoid such interactions. I've taken to printing articles I find online and reading those - more anonymity. I guess I don't like to "signal" what I'm reading.