I waited for the second generation Kindle, just to see how they would improve it. Overall, I like it. I especially like the online browsing (although slow), purchase, and download without any added communication costs.
The device is pretty slick, although I'm sure a third generation reader will show even more advances. But the main reason I took the plunge was because of the hugh number of books it can store (they claim up to 1500, but according to my calculations, it would be closer to 3000), and the paperback-price for what would otherwise be a $25-$30 hardcover. I estimate the book savings will pay for the Kindle after about the first 25-30 books purchased.
The biggest drawback I've seen so far is that the selection of books is heavily weighted towards new-release bestsellers and public domain or less well known books. There are a lot of mid-level authors I'd like to see in electronic format, but I guess the first impulse is to offer the hot new books, and older ones that are either cheap or free.
A lot of this can be solved when publishers see this format as another source of profit, just like audio books. You can't cram a lavish coffee-table book into a Kindle, but it's great for serious portable reading.