Is the villain of the piece Amazon or is it Holt,Rinehart & Winston or Penguin or is it DRM or is it Cloud computing.

Here's my take:
A lawyer at a publisher got wind that they didn't have the rights to sell 1984 or Animal Farm. They were afraid of getting sued. They called the lawyer at Amazon and threatened to either sue them or just needed help to cover their backside.

The Amazon lawyer had a conference call with some of the techs. The question at hand was "What are we going to do?" A tech says we can remove the "illegal" copies from everyones Kindle. "Great! say the lawyers. Someone pulls the switch. And everyone is happy.

Then Jeff finds out. The brand damage is in the millions. All the lawyers are going to be busy, being busy for the next couple of months.

According to this update, the books were deleted from the Cloud not from people's Kindles. That's not the way I understood it, but we'll have to wait a bit to get some clarity.
UPDATE: Sunday 2:33 PM EDT

From SecuObs.com
The issue is caused not by DRM, but by cloud computing. The problem is that Amazon has a cloud service in which Kindle customers can keep their e-books on Amazon's shelf, and shuffle them around to any Kindle-enable device they have like a Kindle proper, or an iPhone running the Kindle app . Customers can even delete a book from their Kindle and get it back from the cloud at a later date.

The event is that Amazon removed the book from the cloud, not that it had DRM in it. If you are concerned by this, you should be concerned by the cloud service. The cloud service enabled Amazon to respond to a legal challenge by removing customers' data from the cloud. They didn't need DRM to do it. In contrast, if iTunes store or the Sony e-book store had improperly sold a book, they wouldn't be able to revoke it because they don't have a cloud service as part of the store. eMusic, incidentally, regularly adds and removes music from their store with the waxing and waning of desire to sell it. This is why we need to look at it for what it is, a failure in a business model and in the cloud service.

David Pogue's column at today's NYTimes has a rich stream of comments.
My favorite, so far.

I checked http://www.copyright.gov, and it seems that “Holt, Rinehart & Winston Inc” are the copyright holders. On the other hand, Penguin Books are also publishers of the book on some websites. Anyway, it seems that one of the two are responsible for this.

Here's the one that relates to education.

And what happens to people who highlight and annotate the books? Searchable and hideable annotations should be a major benefit for ebooks. But if your books may suddenly disappear, that can be a lot of wasted time.

I never write in books, but for some take lots of notes on my computer. I want a good ebook reader for the books I need to reference. I won’t buy one where my annotations may disappear.

A few of the others for your perusal. Compare and contrast.

Many public libraries now have ebooks which can be borrowed with a library card, just like printed books. So for those of you looking for a way to get your ebooks for free, go to the same place that’s been lending books for more than a century. It seems like many tech savvy people are not library users by nature so they don’t realize that libraries have adopted new technologies. Through my local library’s website I can download ebooks and audiobooks as well as access dozens of databases that I would have to pay for otherwise. It’s great - and it’s all free.
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Anybody working on backing up content on the Kindle?’Of course - Do a quick Google search and there are scripts out there to to take Kindle AZW files and convert them into non-DRM’d MOBI files. You can save them, back them up, put them back on your Kindle or read them on any PC or device that supports the Mobipocket format. (The Kindle format is just a MOBI file with DRM and renamed AZW). I’ve been doing this for all the books my wife and I have bought.
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I just wanted to note that since the copyright on George Orwell’s works has expired in Australia, you can read and download the books here for free: http://ebooks.adelaide.edu.au/o/orwell/george/
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The publisher is being doubly foolish by refusing to sell copies of a book that can be obtained online for free anyway. What are they thinking? Do they not realize any amount of sales is better than $0?