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Lots of people are very, very happy with the Sony PRS-300. I have only ever seen one in a shop and it looked pretty nice. I don't believe it supports folders though (not sure how much of an issue that would be to you) which can be a pain if you want to have lots of books on your device - this is the one thing I would change if I could about the Kindle 2.
I have the PocketBook 360 (it does support folders, great) and it is a wonderful 5" ereading device. It does also have expandable memory using micro-sd cards - the Sony 300 is stuck with just the memory you have on board. You can also do neat things on the PB 360 like copying files to/from the micro SD directly to the main memory, deleting and renaming files on the fly all without having to connect to a computer to do so. It has a hard cover, so no need to buy a separate cover for it.
Overall, I think the PB 360 has a lot more going for it than the Sony prs-300. However, if all you need is a basic, no-frills ereading device - the Sony might be absolutely fine for you.
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