Recently, I bought the Kindle. I had thought of buying various different readers, but eventually went with the Kindle because the Sony Touch was slightly more expensive and there has been some talk that the Touch isn't quite as sharp. I bought the smaller one because I can't picture having the larger screen without the ability to use a stylus to write notes. If I'd bought a larger screen ereader I would have gone with Sony's for that reason and its lower price. The Kindle, at $259. was the best price for an ereader that I trust.
The Good: When you use the Kindle for what it is built for it does an amazing job. It is the perfect replacement for paperbacks. The e-ink is crystal clear and it's not another glowing screen to wear out your eyes. You can adjust the font size and I did bump it up a size because of my eyes which were never so great and which have been worn out by too much staring at glowing screens; if you have younger eyes you may bump it down a size to get more on one screen. You can hold the tablet easily in one hand and click the button to change the page with your thumb. Personally, I suggest that you don't get one of the many covers which make the Kindle look like a book and will require you to use both hands like a book. It just works perfectly as a one hand device.
Prices at Amazon are generally very reasonable. Amazon held the line at $9.99 maximum for all e-books until recently. When Apple sold consumers down the river in order to get publishers to come to its bookstore for the iPad Amazon was forced to give ground. Still, I think the highest price I saw was $14.99 and I found a number of classic books, such as Blackstone, for $.99 (I even found Moby Dick available free of charge). Outside of Amazon, other companies can provide digital books which work on the Kindle through various formats. Some companies are reasonable about this and some are insane enough to think that I'll pay the price of a hardbound book even if they haven't paid for ink or paper or shipping or the profit the brick and mortar would have taken.
All-in-all, once ereaders come down to a reasonable price (they really should be $99 or lower), there will be no reason for anyone to buy a paperback anymore except sheer stubbornness. The only reason to buy hardbound books will be to have the book on a shelf to impress people.
The Bad: The thing I'm most upset about has nothing to do with Amazon. It has to do with legal publishers. This would be a good medium for legal trial books - the ones companies put out every year for practitioners to take to court with them so that they are able to make arguments on the fly. Specifically, I checked for Criminal Offenses and Defense in Virginia, The Law of Evidence in Virginia (usually called "Friend"), Police, Crimes and Offenses and Motor Vehicle Laws of Virginia (yearly selected codes for crime and traffic), and the Annotated codes (both Lexis and West). None of these were available. Neither West nor Lexis had any useful books which could be downloaded on the Kindle. Last year, West announced that it was putting 30 of its books out for the Kindle, but there wasn't a single one of them which was really of use.
The Other: PDF's don't work well on the Kindle; it shrinks them in size and can make them very difficult to read. I can't really complain about this because if I'd wanted full size I could have bought one of the larger ereaders.
I also can't use the wireless downloading of books, but this is not Amazon's fault. We just have very limited wireless service here in the mountains. I was able to get the wireless to work over in a town in Kentucky, but didn't download any books (just checked the internet). Not having wireless isn't all that bad, all you do is download a book from the Amazon site to your computer and transfer it via a USB cord.
The internet browser on the Kindle is primitive. It works about like a phone browser on a non-smart phone. If a site is optimized for mobile browsers the site is easily read; if the site isn't optimized for it (or has flash) it's just not going to work very well. Basically, you should be able to read well put together blogs and newspapers.
The MP3 player is basic. It works. It can also play music while you read books. My Creative Zen is more versatile and smaller, so I use it instead.
Versus the iPad: There have no shortage of stories predicting the death of the Kindle because of the coming iPad. At this point the Apple reality distortion field is in full effect, so it's hard to tell. The one actual bit of research I've been able to find indicates that the Kindle is actually doing better than the iPad.
I wouldn't be surprised if this continues. I know that since I've started carrying mine their have been a lot of people showing interest in it and most of them are people I don't see buying an iPad (or any other tablet computer). My main hope is that the competition from multi-purpose tablets will drive ereaders down to where their pricing ought to be, perhaps $79.99 for the smaller and $124.99 for the larger unit. It'd also be nice if they finally went to color e-ink. I hope they don't try to change from single focus devices to multi-focus. If the ereader providers try to compete at that level they'll lose.
Conclusion: As something to read with, the Kindle is easily better than a paperback book. In the end, even at $259, it will pay for itself in money I save on books (assuming the current pricing scheme holds) in about 18 months, but it is really too expensive to achieve the level of market penetration it should be getting. If you can afford one buy it.
[addendum] cross posted - with some improvements at my office's blog "The Digital Office".