I have my Gen3 since late 2008. So far I haven't had any problems with it and I have read a great number of books on it.
I still just load it up with mobi files and read it. I cannot justify a new reader, unless this one dies. The screen is very good, bright white with nice contrast in comparison with some greyer new ones allowing for touch interface, the battery is good enough for many days still, even though it has degraded a bit and the leather case is the only thing showing its true age.
I need my reader to read books and that's it. I don't want it to connect to the internet, listen to music or draw with it, etc...I have other devices for those things and even more. I want it just to read and for that gen3 is still perfect.