I find the Nokia 770's 800x480 screen "good enough" for e-books, even though I like a relatively large font. I'm not sure why more devices don't use this display. However, the 770 can only read books without DRM encription. Most new releases are only available in proprietary formats, with DRM. The advantage of non-encrypted formats is that they are device independent, the disadvantage is the lack of availability of recent titles.
It might be worth waiting for the Amazon Kindle (same screen as the Sony Reader). There is no guarantee that this will ever be released, but if it does then most publishers will want a Mobipocket (now an Amazon company) version of their e-books. Mobipocket has limitations but isn't a bad choice (as proprietary formats go), and in particular there is Mobipocket reader software for many devices. The eventual Kindle might be different from the pre-production device we know about, but the latter had a integrated snap-on reading light (E Ink can't use a back light). It looked ugly in the photos, but it might look better in real life and anyway the outside was not in its final form. Details like the reading light, cell phone network e-book delivery, and the full keypad indicate that Amazon has a different idea of what an e-book reader should be than existing devices.