Yes, E readers are better in terms of displaying and reading books. They have a screen that is much easier to read due to not having a refresh rate (they work similar to an etch a sketch using magnets to place text on the screen). They are also lighter and have better battery life. A tablet is obviously superior when comparing things like games or movies.
As a devout user of an iPad (third generation), I can say with confidence that a tablet is a much superior product to an eReader. An eReader is a one-trick pony. It simply reads books and that is it. A tablet is much more versatile in what it can do.
I think that tablets are better than ereaders. I feel that ereaders only serve a certain purpose. Tablets are meant to be used for a wide variety of tasks, which makes them a better option. But it does depend on what you are looking to purchase. If you want something that can just read books and do a few other activities, an ereader is the better option.
Tablets are better than eReaders because they are made with the intention to have more functions. eReaders are meant to red books from, and because of this all function that they have not associated with reading are mediocre. Tablets do several things well and its been proved that they can do everything eReaders can do, but better.