Patently Apple published a patent Apple filed for in Q4 of 2009 which would allow for an iPhone hybrid screen that would be able to switch between an ePaper display or a standard LCD display. The users would be able manually switch between display modes, in addition to the iPhone being able to recognize what is being shown on the screen and choose between the ePaper or video modes.
The screen would also be divided into quadrants, which would allow for different parts of the screen to utilize different display modes.
eInk readers such as the Amazon Kindle have been popular among readers, as they are easier on the eyes and can be used outdoors without a significant glare. While this was filed before Apple’s iPad was released (not an eReader per say, but competes with the Kindle), it’s safe to assume that Apple was very far along in the development process as this was filed only a few months before the iPad was released and while only the iPhone is shown in the patent, it’s possible Apple was thinking this up for their tablet.