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Have you looked at the new Sonys that just came out? The 650 is the same screen size as the 505 (6" screen) but it's smaller and lighter. I went from the 505 to the 350, which is a 5" device. It's small and neat, but I've had no problems reading on it despite the smaller size! Both the 650 and the 350 are touchscreen, and the screen readibility is even better than the 505. They don't have wifi, but I've never had to buy a book so badly that I couldn't wait until I got home or to the office. They're more expensive than the K3, but you benefit from open format and being able to purchase books at a number of sites. As well, you can also borrow library books in the US.
I'd check out the discussions on the Sony and Kindle forums.
Whichever one you choose, I'm sure you'll enjoy it.
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