I have the Kindle with the 6" display (the version before the current one) and I love it. I never thought I would like an e-reading device, but this has been great for me (and for my 82 year old mother - who got hers as a birthday gift 18 months ago). I think they are pretty sturdy, light-weight, and easy to read from especailly since you can change the font size so easily.
I haven't explored titles that could be used in the Lower School, but I think there are plenty of titles for Middle and Upper School students. When I searched for "elementary school books" it found 840 titles. Of course, not all of them are books for elementary school students...
I know that the school has purchased 5 or 6 Nooks (because we deal with B&N when ordering books for the students). I do not know if they are in use yet or not, and since I don't have a Nook, I don't know how it compares to the Kindle.
They work beautifully with an Elmo or overhead, but I don't think most ereaders would be able to hook up to a smartboard. Some of the smart tablets coming out might; do you know if you can use an iPad in the way you describe?