This is an obvious and overdue move by Amazon. I'm assuming Amazon's OS will be updated to allow Overdrive in the same fashion as the Sony readers do, no extra burden on libraries.
It could shift some fence-sitters on their next purchase. I know it was one big strike against my chosing a Kindle wifi. Now, add an IR-similar touch screen (minimizing reader dmensions, relative to the screen, but maintaining clarity) and it'll be hasta la vista Sony for me.