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If your sister and you were willing to share an Amazon account and like the same type of books, I think the Kindle would be the best device for you hands down. My mom and I both own Kindles and its been great sharing books.
I own a Kindle 1 and see no compelling reason to invest in upgrading; however, I would have no problem buying a Kindle 2 for my first reader either.
- Kindle 1 has a removal battery and SD card. Kindle 2 is slimmer (and has more built in memory and better power management).
- People either loved or hated the Kindle 1 page turn keys. They are redesigned on the Kindle 2 to address the complaints.
- Kindle 2 has a faster processor and more scales of grey. I think the scales of grey is a big improvement for pictures/charts but some report the nuances make some fonts appear lighter.
- Kindle 1 has a scroll wheel and Kindle 2 has a joystick. I think the latter makes things like navigating periodicals quicker. The scroll wheel is more basic but simple isn't necessarily bad (My mother wrote "The new Kindle has a joystick..I would hate that!").
If I was looking at a Sony, I would personally go with the PRS-505, not the 700. The 700 has a touch screen and built in light but with a trade-off in screen clarity. Either way, you will give up the ability to buy ebooks form the Amazon store and need to connect to a computer to load books.
Another option is buying a used Kindle 1. You get the remainder of the warranty from Amazon (and if the seller bought a square trade warranty, its transferrable).
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