Siva,
I have the prs-350 and K3, and I think the 350 has sharper text, but that may be due to a smaller screen. I don't like the K3 keyboard and prefer the touch screen to read and take notes. I like the ability to print and save my notes on the Sony Reader Library, but to save the entire highlight, you must strip the DRM from the books as there is a copy protection built into DRM books. If you like to see the highlights and notes of other readers, the K3 will show you what everyone else is saying about the book they read. Andrei Codrescu made some observations about that issue which I tend to agree with:
http://www.npr.org/2011/03/07/134342...onship?ps=cprs
For me, it just boils down to touch screen vs keyboard, and Sony wins. I only use the K3 to try out sample books as Sony does not have that feature.
Good luck!