[Tiersten]

Pros:
Shape of the Kindle 1 is more interesting than the graphite/white slab of the Kindle 3.
The Kindle 1 box is much better than the Kindle 3 one :P
You get CDMA Whispernet for the Kindle 1 whilst the Kindle 3 WiFi is WiFi only.
Replaceable battery and memory card slot on the Kindle 1 (From Kindlekitten's post)

Cons:
Older software on the Kindle 1 which doesn't get upgrades now.
Screen isn't as good on the Kindle 1. Slower refresh and lower contrast.
Kindle 1 is larger and heavier.
The Kindle 1 is CDMA only and won't work outside of the US.
The Kindle 1 doesn't have WiFi at all.