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The Kindle does not read epubs natively. I'm not sure about txt or pdf. There are (as always) ways to strip DRM and convert between formats. Have you considered one of the other readers out there? I read epub, pdf, ADE pdf, txt, rtf on my Sony without the need for any conversion. With the exception of B&N and possibly Apple?, epubs have a generic DRM - I buy mostly from Kobo but read on the Sony. An epub reader has the added advantage of being able to borrow library books. Your local library may have ebooks, otherwise there are a number that allow non resident membership for a fee. Philadelphia is very well regarded on MR.
Which epub reader is another question, and depends on how you are going to use it and what features you value. For myself, I chose the Sony for its simplicity and price - at the time it was one of the cheaper ones available to me, I definitely wanted epub, I wanted a solid build and reliability since I was buying while overseas and returns would not be worthwhile, and I wasn't interested in connectivity. Also keep in mind that connectivity is generally designed so that the customer can buy direct from the tethered bookstore - I'm not sure how well it works with other sites although you should be able to find the information in the relevant device forums here.
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