I have a Kindle 3 with 3G. I love the Kindle for reading - it's very easy on the eyes. I also think it is more comfortable to hold than either a paperback book or hardcover - I find myself reading more now, for longer periods at a time.
The lack of backlight is what makes it easier on the eyes, but also means you need a clip-on light to read in a dark room (or buy the expensive cover with the built-in light), which adds to the weight of the device, and throws it off balance, making it less comfortable to hold.
I also have an iPod touch that I have loaded the Kindle app on, and sometimes load the same book to have a back-lit device to read on. But I find that my eyes burn after reading on the iPod for an hour or so.
I really like the feature of being able to position on a word and get a definition - but that is much easier to do on the iPod than on the Kindle - for the iPod, you can just touch the screen, but on the Kindle, you have to repeatedly click the 5-way controller to position on the word.
I agree with another poster's comment that books with illustrations do not view well on the Kindle - There is no capability to magnify the picture or table.
The web-browser feature in the Kindle is slow, and annoying to use. Although you can magnify a section of a web-page to make it more readable, it seems you have to make that adjustment each time you change to another page. I have found it OK for reading or even sending emails in a pinch, though.
I might try T-Al's links to be able to load library ebooks.