Does Kids' Reading Need to be More Interactive?

That's what the new LeapFrog Tag promises.  From the New York Times:

This week, LeapFrog pulls the wraps off the LeapPad’s successor, the Tag, a thick, white and green plastic stylus that turns paper books into interactive playthings. LeapFrog is betting that the $50 Tag, which will be available this summer along with an 18-volume library that includes children’s classics like “The Little Engine That Could” and “Olivia,” will be the hit it badly needs. It calls the Tag its “biggest launch ever.”

The Tag, officially called the Tag Reading System, works a lot like the LeapPad. Children can tap a word with it and the stylus reads the word, or its definition, aloud. They can tap on an image to hear a character’s voice come alive. Interactive games test their reading comprehension. At its simplest, the Tag can also act as an audio book and simply read a story from beginning to end.

Link: LeapFrog Hopes for next hit with Interactive Reading Toy, via Crooked House, Popgadget.

The Tag also tracks reading progress, which parents can monitor on a website.

I know LeapFrog puts a lot of research into its products so I'm sure the design of this toy is well thought out, but this seems like technology in search of a problem.  Is gadgetry like this going to promote more love of reading or more love of gadgetry?

Engadget did a post on this device recently, and one of the comments includes this:

I have 2 small children, and while we do a lot of "conventional" work on their reading, the Leapster has been useful and effective.

As well, the Leapster has gotten my kids using technology, and getting comfortable with it, from an early age. Both of my kids (4 and 7 years old) read well above their age level, and their tech-literacy is far above their peers.

What kind of tech-literacy do 4-7 year-olds need?  Nobody needs that early a start, do they?  I don't have kids, so maybe I'm just out of touch.  Getting kids familiar with the tools they'll use in school makes some sense, but there's got to be a limit to how young the pressure for techno-literacy needs to go (check out the i-grow PC concept for an idea of where we may be headed).