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Congrats on your purchase... I scored a 505 during the $199 Borders sale and have been enjoying it for the past week; it's also my first e-reader.
I've found the 505's PDF ability to be acceptable, though not perfect. It usually preserves paragraph breaks, but will give a ragged-right margin. That's pretty much a limitation of the small screen displaying pdf's formatted for larger displays. They're still plenty readable if it doesn't bother you too much.
My favorite format for the 505 (besides lrf) is rtf, which the 505 reads natively and displays with full justification. Looks just like a paperback. Best of all, you can reformat the font and sizing in just about any text editor.
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