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On Kindle, .txt files are readable natively - no conversion necessary. If they are actual book files, you may want to convert them using Mobipocket Creator, Publisher edition (check the box that says "Suppress single carriage returns). Or get the book already converted to Mobipocket format. I keep small .txt files on my Kindle with lists of books I want to read, etc.
.doc files and .pdf files must be converted for Kindle 1 and Kindle 2 (you can use Mobipocket Creator again). The new Kindle DX will read .pdf files natively (.doc still requires conversion), so yes, you can copy your own files to it (just use the USB cable, or email to your Kindle - it will cost at least .15 if you email direct to the Kindle DX).
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