Hi all. I'm new to this site but I thought that I might add my thoughts on this problem.
First, problems attributed to the Kindle cover have only ever been reported on the non-light versions. These differ in that they have painted metal tangs. I have two Kindles. One has frozen once in many months use, and has rebooted twice when the cover was opened. The other newer one either freezes or reboots almost every day. The paint on both appears fully intact, which would appear to rule out short circuits as a probable cause anyway.
I have seen the Kindle in the act of rebooting after the cover has been opened, but not turned on. My girlfriend has seen this a number of times, mainly after she has walked downstairs carrying the closed Kindle tucked under her arm. Here's what I think happens.
1. The non-conducting closed face of the cover rubs on the non-conducting surface of the screen and the Kindle body. The tribo-electric effect transfers a static charge from one surface to the other.
2. When the cover is opened, the charged surfaces are separated. Being non-conductive surfaces these charges take a long time to dissipate.
3. The circuit board is effectively one big conductor. The static charge on the screen surface attracts charge from the conducting board, effectively raising its potential above 'ground'
4. However, there are two lumps of conductor not effectively connected to the circuit board, namely the two painted metal clips. There now exists a potential difference between the conductive clips and the board.
5. If the potential is high enough, then the paint breaks down, and charge flows rapidly to equalise the potential difference. This puts a nice big spike into the power rail (or the other connections that Dave identified on the lower connector). This resets the device, or freezes it, or damages it, or who knows what !
People have apparently eliminated the problem by either increasing the isolation using tape, or removing the paint from the contacting areas to connect them fully. And of course, taking it out of the case altogether.
Actually it occurs to me that bringing the power rails of a piece of complex digital electronics out to a couple of external metal contacts is not exactly the best piece of design in the world. For this reason I don't think either solution is that great, since it is possible to put a static discharge straight into the device at any time by just touching these metal clips. After all, you wouldn't go poking your fingers onto the circuit board of your PC without proper anti-static precautions, now would you ! Incidentally, if you go putting discharge spikes into pins that control things to do with current, what will that do to battery discharge ?
The trouble with static effects, as I'm sure a lot of you know, is that they can be difficult to reproduce. You're more likely to see this if the air is very dry (it has been here recently) and you carry the book so as to rub the cover on the screen just before you open it. This seems to be the major difference between the way I and my girlfriend use our Kindles. However, I'm not going to rubbing the cat against the screen just to see if it (the Kindle) resets. My inclination is just to cut off the tags and stick the Kindle to the case with Velcro. Or get a refund and buy a different case.
Of course, electronic equipment for sale in the EEC must be tested for compliance with the appropriate standards for electro-magnetic and electrostatic susceptability. I'm sure the Kindle was - its got a CE mark. But was it ever tested with the case attached, I wonder ? Anybody with access to the appropriate test facilities care to try this ?