I have a 4th generation Touch and find the screen just too small to read on pleasurably, though I have to admit it does work fine from a technical sense.
I have an Android phone (EVO from Sprint) with a 4.3 inch screen (about 3/4 inch larger diagonally) and find it acceptable to read on, though it isn't my favorite. I actually do about 20% of my reading on my phone now! Seems that somewhere between 3.5 inches and 4.3 inches is a critical level for me between acceptable/unacceptable. In terms of surface area, the 4.3 inch screen is half the total area on the screen of my actual Kindle, which may mean something.
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