It definitely has its share of bugs. I wouldn't classify it as wifi drop outs, more like problems connecting to a wifi hotspot, even if it's a wifi spot I use all the time (like my home or work router). It's so new though that there aren't a lot of discussion groups on it, not a lot of community troubleshooting.
Still, it isn't as much of a problem as you'd think. My routers use a hidden SSID, so it usually involves just typing in the name of the SSID and the ipad jumps on the signal in a few seconds.
This past weekend I went away to Vegas, over 12 hours of travel in each direction, and I put the ipad through its paces. As a book reader, it did wonderfully. I was very happy on the plane rides to not have to rely on overhead light. The adjustable font size made reading very easy, particularly with it propped on the tray table. I like that it's so multi-purpose, I have an RSS Reader and a News Reader installed, which each download hundreds of articles, so could bounce back and forth when I started to get bored with the book.
The hardest part was using it outdoors by the pool. I put the brightness on full and generally sat right on the edge of the shade (which took a LOT of moving around), and I managed to read throughout the day, but I wish I had brought my kindle for outdoor reading.
So far, I've only read books that I purchased through the kindle store. I have yet to import any of my own books, and I want to see what a pdf/epub full of page scans (the actual images, non-ocr'd) will look like. I have a few programs on the ipad that will handle very large pdf's gracefully, and I'm pretty hopeful about the experience. So far, reading comics has been very enjoyable (which I guess is the same thing as what I'm trying to do, so I'm fairly sure it will work, except comics are typically only 20 scanned pages each).