It really depends on the features that are most important to you. The Kindle Fire is similar to a tablet but it does process slower than a regular tablet, while offering a much lower price. It still is an e-reader with color e-ink. I have been wanting a good e-reader that I could also entertain the kids, and not require a wifi connection to work.
I thought I found the perfect one when I saw the Kindle Fire, but the idea of constantly having ads and movies that only could be watched by streaming video turned me off. I know most smartphones can also be used as an e-reader but I didn't want something that has added monthly expenses for a phone/data nor a contract.
I ended up getting a quality Vizio tablet that came with only 2GB of memory at a great price for $190 and bought a 16GB Micro-SD chip of memory for $15. It is perfect for my needs because it can play games, music, movies, and still be used as an e-reader. The battery life isn't as long as most e-readers, but since my husband already has car chargers and BlueTooth headsets for free from work I didn't need to buy any accessories. Plus most places have a free wifi connection I can use it didn't add anything to our budget.
I would recommend taking a little time to try out different e-readers and tablets at the store to see which one you like best.