Too bad you didn't ask this a few weeks ago because Borders had coupons for Sony 505s for $100 off, costing only $200 for it. I took advantage of this and got one for just plain old reading purposes so I could have my own reader (my wife has a 700).
I can't speak for the durability of the 505 because I haven't dropped it yet and don't plan on it, but having read a lot of reviews of Kindle 2s and 505s I have seen a much lower percentage of breakage complaints for the 505. I can testify that the clarity of the 505's screen is superb. It does turn pages slower than my wife's 700 and I suppose if you are impatient or easily annoyed by such things that could bother you but it's really not that bad.
If you mostly want free ebooks such as Baen's sci-fi stuff or other out of copyright ones I would suggest the Sony over a Kindle 2 as you can get it for $100 cheaper or more. Even if you purchase ebooks I'm not sure the large price difference between the 505 and Kindle 2 justifies saving a dollar or 2 at the Amazon store anyway, especially since other ebook stores are dropping their prices lately anyway. Also I would suggest getting a M-edge cover for it because it offers better protection than the standard cover that comes with it. Andybaby has a great review of the M-edge covers for the Sony 700 here:
https://www.mobileread.com/forums/showthread.php?t=47041 which describes them in detail (the 505 versions of the case are identical except they are slightly different in size to fit the 505).