My Kindle 3 arrived yesterday. It's remarkable the improvements Amazon has made. I use both the Kindle 2 and Kobo on a daily basis, swapping from one to the other depending on the content at hand (and, occasionally, reading the same novel on each just to experience the differences).
The Kindle 3 contrast is striking -- I was expecting incremental but its more than that. And while the screen size is the same, the "real estate" is larger because the top bar with the title has been removed and the text is allowed to fill the screen -- it results in extra lines.
The font controls are improved: more sizes, a choice of serif and sans serif; and a "condensed serif " mode which allows for a larger font without sacrificing words per line. You can adjust the line spacing as well.
Finally the form factor: Kobo and Kindle 3 are the same size; the Kindle is slightly thinner. In its lighted case, the Kindle 3 now feels like a paperback vs the Kindle 2 which felt like a trade edition.
All these things add up to a significant advance.
(Plus, the wifi only unit is pretty speedy -- relatively speaking -- in browser mode and has a number of useful options to make casual browsing credible vs the tedious 3G browser of Kindle 2.)