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As far as I can tell Gutenberg books can be transferred to the Kindle, but can anybody confirm this?
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Yes, but I'd recommend checking out the ebooks uploaded here at mobileread. They're better formatted than the PG books. Up at the top of this page in the blue bar you'll see an "E-Books" button. You want the MOBI filetype.
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Also, is the Kindle a good choice? I definitely want a device that is primarily a book reader, and can use in sunlight, etc. I've already got an iPhone, so the iPad doesn't interest me. Also, how does using a device like the Kindle compare to reading on the iPhone? I've read the odd short story on this, but wouldn't like to use it for anything longer.
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Well, "good" is a very subjective. The biggest 'issues' with the Kindle are that it's primarily tied to the Amazon store because it does not read ePub filetypes or non-Amazon DRM. I love my K2 and have no issues with it, aside from not being able to read ebooks from my local library system. The Kindle has a 30 day return policy (or it does in the U.S.), so I'd recommend trying it and returning it if you don't like it. It's a different experience from reading on an iPhone, and I think a much superior experience.