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So, I'm a Kindle 2 user and I would highly recommend it. However, in your case I mean that more as a signal that I'm not biased when I recommend you look at an iPad.
Two reasons, screen size and interactivity for note taking and highlighting. If you are reading PDFs you really need a bigger screen.
Hopefully, someone who has tried the Sony touch screen will chime in. However, my expectation is that no touch screen will give you a smooth annotation experience on an e-ink screen. Highlighting is probably fine. But if you want to draw arrows, scribble notes, and make diagrams you probably need another technology.
I have tried an iPad and an app called iAnnotate for pdf's for two weeks. It was great. I must admit however, that in the end it didn't meet all of my needs and I returned it after two weeks.
However, if your main use case is note taking, pdfs and annotation then I think an iPad will be better, albiet much more expensive. On the other hand, if your goal is reading I recommend a Kindle and from what I hear from others, you won't go wrong with a Sony either. The Kindle can support notes its just not as smooth and integrated as the ipad, and I'm not sure I would want to be in class typing in notes on a Kindle.
If you do decide the Kindle is the best route for you, don't worry about the conversion process. As long as your Epub's have no DRM, that is. Load up the latest version of calibre and set it to convert in bulk. Come back in a bit and it'll have the job done with no hassle.
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