I have used my HX4700 successfully for 2 years as an ebook reader. 4" screen, 640x480 res, supports all the readers and formats.
Battery life is about 3 hrs (longer in bed when it's dark and brightness is down).
Can also see video, music, etc etc.
Sadly, HP stopped making these. Big downside is cost, although used ones can be readily obtained on eBay for 300-400$.
Of course, can't compared 4" to 6" of Sony Reader, but backlit screen, very sharp, all the colours you want, and in my hands at least, in teh past 2+ years, a totally stable device (I don't load all sorts of useless programs on it).
Oh, yes, and if you care about that sort of thing.. it's a fully featured PDA. Best of the breed really.