In addition to adding a note to a particular passage, you can highlight it.

The notes and highlights then show up as "My Clippings" in the content list. I find this rather annoying since it starts to clutter things up.

Another annoying feature is that the Kindle doesn't use page #'s so it's hard to cross reference it to the dead tree version of the book.

The content manager would also be better if it would allow you to create directories.

Overall, I'm pretty happy with the Kindle since it allows me to read more material on the go. The free EVDO access is also pretty cool, although they really need to improve the web browser. It's good enough for google maps though which has been very handy.