To respond to taildragger: there is no problem mixing LRF and ePub titles on the updated Reader. I have no idea whether everybody will get all their books back with the upgrade; this was my experience, but that doesn't prove much.
Also, is having the books by author and books by title subdivided into groups of a few alphabet letters and books by date subdivided into various time periods (today, this week, this month, etc.) a feature of the newer readers that has been added to the 500? Just curious.
In any case, I've packed up my second reader to send off to Sony. Now that I know that no harm is done, off it goes.
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