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The differences are relatively minor. The new K4 has a shorter battery life (1 month vs 2) and half as much storage space as the K3 (1.3GB vs 3.3GB user accessible) . Amazon says that the K4 can hold 1,400 ebooks vs 3,500 on the K3, and that is about right if some of your ebooks have many illustrations. The K3 also has a 3.5mm headphone jack (audiobooks). The K4 is lighter and probably turns pages faster. The screen is the same, and much better than on the K1.
Obviously, the K3 has a physical keyboard and you can judge from your K1 how much that matters (probably not much).
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