I wondered the same thing for a few weeks, but I quickly drew some [valid] conclusions:
1. Taking care of your patients doesn't have to involve visiting their room every 10 minutes (some of my female classmates are having a difficult time understanding this concept).
2. If you're a generally nice person, the residents will generally treat you with respect, grade you fairly, and won't care that you read, especially if you're reading relevant material.
3. The residents have their own lives, their own marital problems/kid problems/etc., their own in-service exams to prepare for and, frankly, don't notice you as much as you may think. Bottom line: they don't care that much about you!
4. It is INCREDIBLE the amount of information that you can learn by studying for 10 minutes here, 5 minutes there throughout the course of the day. You can dramatically reduce (or eliminate) nighttime studying and still do extremely well on shelf exams. During the third-year, I've studied at home almost none and have not suffered academically. But I've not wasted a single minute on the wards.
Hope this helps. Best wishes