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Try out the K2 and see what you think. I have a K2 and a Kindle 3 and I still use both of them frequently. I call the K2 my "bathtub Kindle" but I also use it for times when risk of damage or loss is high. I've owned it for awhile now and it's more than paid for it's purchase price, if something happens I figure it's had a Kindle-Life well lived.
I mostly use my Kindle 3 for reading on the back deck and in bed at night.
The main difference between the two for me is the nicer screen and much darker font on the Kindle 3.
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