In history, people--especially those who profit from the current status quo--are afraid of new concepts. In at least one point in time, the following have been accused of causing the death of their respective industries: secondhand bookstores, photocopiers, radio, cassette tapes, VHS, the Internet. Now, when we look back at them, some have become ubiquitous, such as radio, while others have simply been accepted, in the case of secondhand bookstores. That's not to say they don't receive criticism now and then, but for the most part, they are objects of the past as the industry looks for new scapegoats.
Libraries, in my opinion, would have faced the same kind of scrutiny if it weren't for their long history. Most people simply assume that they are part of the common good. You would look like an idiot if you suddenly said "libraries are causing the death of the publishing industry!" But with the rising popularity of eBooks, in the US/UK at least, you can't help but feel that this is the sentiment of many publishers. The obvious culprit would be HarperCollins putting a 26 loan cap on eBooks purchased by libraries. But that's not the entire picture. At the very least, HarperCollins had a policy when it comes to eBooks and libraries. Macmillan and Simon & Schuster for example do not allow eBooks to be circulated in libraries (so I find it ironic that the target of the call for boycott is HarperCollins when there are worse offenders; I mean 26 loan cap is better than a publisher that doesn't allow loaning books right?). It's also interesting that the EULA--tied not to the book you purchase but usually to the devices/software you use--is usually inadequate when it comes to covering library support or even to the concept of books in general.
Publishers are drawing a distinction between the rights of the consumer vs. that of libraries. And that's fair. The usage and needs of a consumer is different from that of a library. Having said that, you can't help but feel that publishers are ostracizing libraries. Contrary to what publishers might believe, librarians aren't amoral. They do want to give publishers and authors their due. That's why when they set up an eBook library, they (usually) employ services like OverDrive and NetLibrary to guarantee that the eBooks have DRM (I'm usually anti-DRM but it's understandable in this case) and expire once the due date is past.
The problem is that publishers are treating libraries as if they were a detriment to their business. For example, the flaw in reasoning with HarperCollins's 26 checkout rule is that a print book doesn't expire after 26 usages. That's why libraries are taught how to care for and restore books, to prolong its lifespan. And when the book finally breaks down, it doesn't automatically mean the library buys a new copy. It might entail a slot for a new and different book.
There are two things that's not readily apparent to people: how a print library works and how an eBook library works. With the former, librarians are constrained by shelf space: they cannot infinitely expand their collection. If they are to acquire new books, one of two things must happen: they must either expand their real estate or discard existing books in their collection to make room for the new one (which is why libraries end up selling some books). Now the first possibility is unlikely to happen and costly so it's usually the second that takes place.
eBook libraries, on the other hand, have the possibility to infinitely expand for minimum costs (i.e. real estate is not a problem). Now this might seem like a big benefit to libraries but there's a significant hurdle eBook libraries have to take into consideration: overhead costs. Establishing an eBook library means starting over. First, you need to create (or license) a system that lets users browse, read, and borrow books. Then you need to train the librarians and staff. Then you need to purchase machines (computers, eBook readers) and other necessary equipment (i.e. router, Internet connection, etc.). Finally comes the actual purchasing of eBooks. Those things don't come cheap (which is why librarians from other countries have a problem with HarperCollins on an abstract level rather than a practical level because they can't afford the overhead to start their own eBook libraries, at least at this point in time) and there is a bigger burden on the library vs. that of an individual user. A consumer's computer can be used for other tasks (such as their business). A computer in the library used for reading eBooks will only be used for reading eBooks (although it can be subsumed into other services the library might be offering, such as browsing the Internet).
Now a library interested in pursuing an eBook collection is making a big investment. The problem with the HarperCollins policy is that it's increasing the burden of an institution that's designed to actually drive interest in the publisher's books. I won't even delve into other problems a library might face, such as format wars, device wars, etc.
Some commenters said that the best solution is for libraries to simply stick with print. Unfortunately, that's short-sighted, as more and more readers (in the US/UK) are getting accustomed to reading books on a screen. Remember how the big publishers and bookstores initially ignored eBooks?
Libraries, at least in the US/UK want to stock eBooks. Unfortunately, the eBook infrastructure, especially those from publishers, aren't--or don't want--to deal with them. They perceive libraries as a big threat when they are, in many ways, their biggest supporters and fans. The tragedy is that some readers who don't find eBooks available in libraries won't necessarily buy them from legal retailers or vendors. There's always piracy and publisher policies only end up hurting themselves.