The iPhone version of Reader is very annoying because it refreshes the page constantly when I come back to it. Thus I lose the place or folder where I was at.
The iPhone (and Android) will unload Reader (i.e. the state of the DOM/page) when memory gets tight (when the browser is running in the background, or when visiting a resource-intensive page in another tab). As devices get more memory (e.g., 3GS is better at this than first-gen) things will get better.
