This is another question where the real answer is going to be niche-specific. Just because people in one niche prefer buying kindle books doesn't mean that even the same person wouldn't prefer a physical book in another niche.
That said, some broad generalities that I've noticed in the niches I've been in and that I suspect hold relatively true for most:
- It's easier to sell shorter works on their own with Kindle. I imagine that a lot of this deals with the cost; you can't cost-effectively sell a short story in paperback and somebody buying a tiny short story for $3.59 (assuming you don't mind selling it without earning any royalties) is going to feel like they were ripped off (theoretically you could sell it for $2.69 in the CreateSpace marketplace without earning any royalties but then they have to pay a few dollars in shipping too!) The minimum cost for a printed book in CreateSpace is $2.15 and you have to price it with a 40% royalty on top of that to Amazon. On Kindle, however, you can sell the same story for $0.99 cents or even $2.99 and it doesn't seem like it's such a bad deal.
- It's easier to consume longer works on the Kindle. I know that for some books, I'd still rather have a physical book, but a lot of that is because I only have a Kindle3 e-ink and if I had a Kindle Fire I might consider books with a lot of full color photos on Kindle instead of as a physical book. In fact, I just finished reading the latest Tim Ferriss book, 4-Hour Chef, this morning. My reading time was limited by the sheer mass of the book…it was too big to travel with, or to read anywhere where I was trying to lay back. A Kindle is much lighter, so especially for books that are mostly text (most books) a lot of readers prefer having the small form factor.
- As mentioned above, some books are better suited to print. Workbooks, full-color artistic books or books with a lot of diagrams, tables or fine detail in the artwork – these are probably better in print. Some people will still rather have them digitally, however, especially as e-reading devices get better.
- Some people collect – and physical books are better for collecting than digital books. Especially people that want signed copies of books. It's hard to sign a digital book.
- Some people want to avoid clutter – and digital books are better for eliminating or avoiding clutter.
Since it's so cheap to hit both avenues, I usually would opt to distribute in both marketplaces. If you make sure that the books are mapped together in Amazon, then reviews for a digital version will appear on the physical and vice versa. If I'm testing, then I'll usually opt for Kindle-only at first, because it is a bit easier and faster, and you can try different mediums (short works as single titles, multiple short works as a collection of titles, a single title with all of a group of short works, etc.) Once I have a better idea for a marketplace, I can roll out a physical book.
Of course, for UBC-style books, I usually go physical first and often stay physical, since the point of those is to have something to hand people. One of my clients, we started with physical books because he probably still doesn't understand what kindle is other than that I send him a royalty check every month and that half the money from it is from the digital sales.
But, I guess the best advice I can give is to test your market and respond accordingly.