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Hello Danny:
I'm a Kindle user and very happy with it. So much so that I convinced my sister to get one -- and it has already shipped and should be in her hands tomorrow. We don't bite, so you can invite your wife to come meet us on the forums.
Amazon's current catalog has tons and tons of recently published books. The back list for some publishers and/or authors is pretty well complete, though for others it's very frustrating.
Take a good look at the books you can download from here, FeedBooks, and ManyBooks. Lots of classics and books published with a creative commons license. If your wife reads Science Fiction, check out the free books at Baen's online library. You can also buy books in MobiPocket format (without DRM) at Baen/Webscriptions.
Since I don't tend to read romances and only the rare ChickLit, I don't really know much about what's available. I did see that some of the Romance publishers offer eBooks directly online, but I think that their MobiPocket books have DRM that is incompatible with the Kindle -- so you might check out what they have on their websites and then go see if there's a Kindle version available at Amazon.
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