Speed isn't an issue if you only read linearly and don't skip around much. Any reader would be suitable.
5" is a little on the small side for reasonably-formatted book blocks. Even 6" is a little smaller than would be ideal, but it's doable. I make my books for my POS-505 using 8-9pt typefaces and it works reasonably well...but some would complain that the text is too small. If you deal with low-quality formats like epub though, you don't need to worry about size because you can just resize/reflow the text.
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