I picked up a Kindle, and have pre-ordered the K2. I've read about 30 books, most of them $25+ versions for $10, so I consider my initial investment almost recouped.
Amazon does DRM the right way - instead of taking away value with their DRM, they _add_ value. Unlike Apple, which lets me download my content _once_, (and if my hard drive on one of the half dozen devices that I've downloaded content and have still to sync back up to my NAS crashed, results in me losing it forever), Amazon has this concept of content that I _own_ - and may or may not be on the device in my hand. A situation which can be rectified in a few minutes with whispernet (their EVDO solution) by copying (as many times as I want) from Amazon onto my current device (presumably now my K2 as well as my K1).
You cannot borrow books from a friend - the content is tied to you, which is why can save close to $15/book.
I love the fact that I walk around with my entire library. I like to travel light, both when moving at home and when on vacation, and not having to deal with a bookshelf of light fiction, and taking books to the library when done, (or going through hassle of selling them on Amazon for 1/3 price) has been a HUGE win for me. (That's one problem that kindle solves). Not having to worry about losing my content, and having Amazon track it for me is another problem. And the book is amazingly easy on the eyes, _particularly_ in very bright light, I find it much easier than paper. (Third problem solved - no glare from paper).
I find it funny when people suggest that the iPhone might be used for reading books - it's as unlikely an idea as people buying a Kindle to listen to music. Wrong Form Factor. Battery life alone would kill you. Not to mention screen size.
With all that said - The kindle sucks as a replacement for technical books. I purchased a couple and was frustrated to no end. Page turning is too slow. The Kindle doesn't have a good metaphor for flipping between random pages. Resolution was poor for technical diagrams. Screen was too small. Rumor has it that Amazon is going to come out with a larger version for textbooks - we'll see. Until then, I continue to buy my technical books on paper. But for fiction which basically is linear page flipping of text - it's great.