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I have had a 350 for a while, & bought a 650 at a Borders closing this weekend (at a big discount.) I preferred my 350 to my non-Sony EBRs, but I prefer my 650 to the 350.
That is to say, if I have both my 350 and my 650 to hand, I'll read on the 650. The larger screen is nice, and I can't tell if there's any difference in the font resolution. Both are easy to hold, or read while in a case that props up on the tabletop. But the larger screen on the 650 means fewer page turns, and given that I read phrases and sentences, rather than words, the large screen "fits" better.
But here's the thing - the 350 is actually portable in a practical sense, while the 650 is not. The 350 fits in my jacket pocket or even my pants pocket, and just disappears. I'm always conscious of having the 650 with me, unless I'm carring some kind of bag to put it in. So if I'm going out somewhere, it's my 350 that is most likely to go with me.
Bottom line is that I don't think you'll be unhappy with the 350, until you get a 650. And then, you'll have both, and be very happy.
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