I read for over an hour a day on my commute to work. For me, the screen on the Kindle is far nicer for reading from. The phone works fine for light reading, but I sometimes find that with more complex text I'll miss some important detail because I'm constantly flipping pages. My handset (HTC Wildfire) has a terrible screen, so YMMV.
I used to use my Kindle for serious reading, and my phone whenever I want to travel light. The Kindle app makes this work very well, as you can pick up from exactly where you left off reading on the other device (though I think this will only work on books purchased from the Kindle store). The latest keyboardless Kindle is so small that I don't even bother doing this, since I can easily fit it in a jacket pocket or whatever.