I bought a Kindle this summer and I absolutely love it. I read 2 - 3 books a month and I figured that mine would pay for itself in about 20 months. I also travel quite a bit, so it's a huge space saver with carry on bags.
The Pros:
The books are cheaper, no shipping charges, you can change font sizes, highlight sections, built in dictionary, and notes (which I use quite a bit).
It also syncs up with an iPhone or iPod Touch - I just bought an iPod Touch and was surprised to see that it syncs perfectly to the last page you were reading on the Kindle, and then when you go back to the Kindle, it picks up where you left off on the ipod - it's a cool feature if you can stand reading on your small ipod screen, which I can only do for limited periods of time.
The Cons:
Text to speech is awful, I tried it just for fun and the female voice is very annoying. The male voice is bad, but better than the female voice. I have no intention of ever using that feature, but if that's important to you, be wary.
Battery life - I have a bad habit of never shutting it down, so the battery drains quicker. I'm sure over time the battery itself will die out, but I don't know how to replace the battery or if you just have to buy a new Kindle. If that's the case, then that sucks.
Construction quality - Someone at work has the 1st generation Kindle and the 2nd generation is built much better, but still I'd hate to get this thing wet, or drop it on concrete. There is a drop test video on the Amazon site, but I don't believe it.