Amazon announced today that library loans on the Kindle are available at 11,000 libraries in the US. The books can save margin notes and bookmarks after your loan expires and will be visible when you borrow the book again or if you buy it.
Kindle library loans can be downloaded over Wi-Fi or by sideloading and will display page numbers that line up with the physical edition of the same book.
Here's the announcement:
http://www.amazon.com/kindle/publiclibraries