My favorite gadget for reading used to be my Palm Zire. I used it for my contacts (sync with Outlook), and for reading books. I found out about it when I saw someone else with one at the airport. Before then, It never occurred to me that you could read books on them.
I was using Mobipocket on my PC and on the Palm. I loved it because it could fit in my pocket, Hated that the battery life was such that I could only read for a couple of hours without charging.
My new favorite is my Cybook. It was quite a search for a cover that would protect it well enough to toss in my purse . . . but I found one--Levenger compact Circa Zip Folio. I put my contacts in a PDF document (thanks to a tool from Microsoft). I take it everywhere with me.
I found out about it on Baen's Bar forum.
So the Palm is now relegated to the nightstand, where its backlight is a distinct advantage and I can operate it plugged in if I have to.