It's not ideal to hold. The Paperwhite is light and small and a definite improvement over the Kindle Touch in ergonomics. But it's also not quite as comfortable to hold one-handed as the Nook Simple Touch, due to the relatively small side bezel. And since it's a touchscreen, you've got to worry about blasting off to another page by accident.
That is highly subjective. Everyone has hands which are unique. What works for one person might not work for anyone else. I personally agree that most Kindles are difficult for me
to hold and operate in one hand unless I place them in a cover to add thickness and surface area. But I must make that same statement state for almost any current device I know of whether a cellular phone, a tablet, an eReader, et cetera. The modern trend in design is to make the devices ridiculously thin and small. Cosmetically speaking it might make for cool looking devices, but ergonomically speaking it makes holding and operating them problematic for a lot of people, myself included.
However I do not see this as a "tragic flaw" because most new gadgets are made thin and small and thus could be said to be also tragically flawed. This includes the iPhone which is sold by the tens of millions. If one is flawed then they all are. I am going to put a cover or case around my devices anyway, so I choose one that allows me to comfortably hold and operate the device.