The back flash is perfectly "normal" on eink devices. That's how the devices refresh the screen.
Now, based on your requirements, I would recommend Kindle 3. It has wifi, you can highlight and takes notes and you can organize your books by collections. It is not touch screen though. The PDF capabilities are good enough for its size and price, like zooming and landscape.
The PRS 650 is a good option for you as well, based on your location and some of your requirements. But I personally find Sony readers too expensive for being just a mere eink device.
Last edited by jocampo; 06-28-2011 at 11:57 PM.
Reason: Fixing some typos