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Well, if you want a device to play videos, then you'll have to rule out the eink devices such as the prs-500. (Or carry two devices, one eink and one LCD.) There are some LCD-based ereaders that can play videos, but the cheapie ones do a poor job of it. Tablets are LCD-based and somewhat more expensive, but they can play videos better and can perhaps provide a better reading experience.
I suppose then the question is, if you really want the one device that doubles as an ereader and a video player, can you get used to reading on an LCD screen? (Eink won't be an option for watching videos.) Some people can, some people can't. Would you really rather read off an eink screen? This is something you'll have to figure out yourself.
If you decide to investigate the tablet option, there's the iPad, and there's various Android tablets which range from cheap to expensive. Lurk in their forums here if you're curious about how people like reading on these types of devices.
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