Right, this was the intent. Making the rules easy to reference was the goal, and breaking things out so that information was easy to find later on. While having something be a fun read on its own is great, it's more important, I think, that the gaming books facilitate playing the game, and other concerns are secondary. No story is going to be as fun as the one you tell at the table through the events of your game.
...
I consider the format of the 4E books to be more similar to reading on the internet than reading a novel. You hop around from place to place, grabbing the important bits of info you need, looking for the text that really jumps out as important because its formatted that way. The style of writing acknowledges that this is a game, not a novel, and the mechanics and story are segregated to an extent.
Of course, printed books can't be the internet. They can be dictionaries or encyclopedias, but dictionary.com and wikipedia will trump it more often than not. No printed d20 SRD could have the immense utility of d20srd.org, no matter how hard it tried, no matter how encyclopedic it was.
4e isn't really even close to a dictionary or an encyclopedia as a reference document. Well, that's not entirely true, the MM is pretty close. But when I see a condition mentioned in an ability and then have to hop around between that ability and some random page in the combat chapter to figure out exactly what that means...issues like this are solved easily on The Internet (ah, the beauty of a hyperlink!), but they're more difficult for a printed book to wrestle with (at least without a humongous index or an exhaustive table of contents). This is solved by the draconian organizational rules of a dictionary or an encyclopedia, but (aside from the MM), this isn't a format that any of the 4e books take.
Not that the 4e book aren't a step up from most 3e books in being reference material. They absolutely are, in many ways. It's just that, if they're trying to be reference documents, they're missing a lot of things that are great for referencing. An appendix list of powers by level and class and type, or a simple list of conditions or magic items by level, would go a LONG way toward making something like the PH a better reference document.
Now, I do consider 4e a better reference document than 3e was, even if it's not to the level that makes it an ideal utility, so there is something to be said for progress.

However, I share sympathies with the OP with regards to the simple gut appeal of a less clinical tone and a flow of reading that progresses naturally. No encyclopedia or dictionary is going to provide this, and it's hardly a generally good idea to mix in rules in obscure places that take a lot of effort to find, but that doesn't mean some appeal isn't lost when becoming more "formalized." But, on the other hand, since 4e has a way to go before it becomes a reference document like that, I'm not entirely confident that much was gained from adopting a more staid style.
Still, that's a personal quibble. If the goal is to make 4e a better reference document for D&D, I can see the value in that goal, and would support it, but it does mean that the rulebooks as-is don't quite achieve this goal (even if they come closer than previous editions).
Oh, and PS:
The style of writing acknowledges that this is a game, not a novel, and the mechanics and story are segregated to an extent.
I prefer it immensely when the mechanics and the story work together to create a harmonious whole rather than when they are on either side of a wrought iron fence made of tigers.
Yin and yang, gaia and uranos, male and female, these things go best together, not separate. It is possible to have your cake and eat it, too, and I'd be eager to see what happens when you rip down that wall (or even when you just make little passages through it), because
that is the ideal gaming experience that I continually seek and get an immense rush off of.
But mostly that is my catchprhase this month, so I need to repeat it every chance I get.
