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Kindle 3's suitability for PDF viewing depends greatly on the PDFs in question. I haven't had many problems with the ones I read in terms of freezing up, etc., but I'm just one data point. I have some PDFs that are perhaps 30Mb and I am able to load them, but some PDFs have high resolution images or complex layout that can cause performance issues.
Conversion works ok with some PDFs and not others. Again, it depends on the PDF.
When a PDF is open, you can do a text search, but Kindle doesn't index them for search from the home screen. If text search doesn't work, it is because the PDF wasn't properly prepared. For example, it may just be a scanned image, without having had OCR to generate searchable text. I've also come across some that were created by something in a way that made the text unsearchable (e.g. what looks like a word is structurally composed of separate, unassociated letters).
Finally the small screen may be an issue. You can sometimes eke out a little more usability by cropping headers and page numbers off, but in the end, you really need a larger screen for a better experience.
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