The ability to borrow library books was not a factor in my decision to go with the 650 since my library doesn’t do ebooks.
That said, my library just signed with overdrive last month and is set to start offering library books this summer, so I will start using it for that. I will be bummed if overdrive discontinues ePub, but that's not my understanding at this time.
I would still want a Sony over a Kindle because of the aesthetics. I love the look of the Sony and dislike the clunky-looking keyboard on the Kindle. (Shallow I know

)
I do use Amazon for DVDs, treats for my dog, and a bunch of other stuff. And I occasionally use them to buy both print books and Kindle books. I’m not anti-Amazon. I just don’t like the idea of Amazon taking over publishing and do like the ability to shop around for my books.
I was very surprised that Amazon agreed to allow library lending since their objective is to sell books. I honestly never thought they would. But even knowing now that Kindle will allow library loaning, if given the choice again, I’d still pick the Sony.