So I emailed amazon support.....and this is the answer I got...20 minutes later. Not bad!
Hello,
We store all your purchases from the Kindle Store on Amazon.com so you can access your books and other content from multiple Kindles, including Kindle 2. Just make sure you purchase Kindle 2 from the account that your current Kindle is registered to.
Here are your options:
SCHEDULE DELIVERY OF EXISTING CONTENT
If you visit the Manage Your Kindle page (
http://www.amazon.com/manageyourkindle) after placing your Kindle 2 order, you'll see your new Kindle 2 listed in the "Download/Send to" choices in the "Your orders and individual charges" section. You can schedule delivery of your existing library before your Kindle 2 even arrives.
DOWNLOAD ARCHIVED ITEMS AFTER KINDLE 2 ARRIVES
When Kindle 2 arrives, you'll see the options "Archived Items" on the Home screen and "View Archived Items" on the Home Menu. Either of these options will allow you to download your Kindle content stored on Amazon.com.
UPDATE SUBSCRIPTION DELIVERY SETTINGS
Subscription content can only be delivered to one Kindle registered your Amazon.com account. You can transfer a periodical subscription from one Kindle for delivery to another in the "Your Active Kindle subscriptions." section of the Manage Your Kindle page (
http://www.amazon.com/manageyourkindle).
TRANSFER PERSONAL CONTENT VIA USB
You can use the USB connection on your Kindles to copy personal content to your computer from one Kindle and then drag it to a new Kindle 2.
EMAIL PERSONAL DOCUMENTS
If you visit the Manage Your Kindle page (
http://www.amazon.com/manageyourkindle) after placing your Kindle 2 order, you can give your Kindle 2 an e-mail address and verify your list of approved senders. You can e-mail personal documents to be downloaded and waiting for you when your Kindle 2 arrives.
You can view details of the Kindle 2 operations in the Kindle 2 User's Guide. You can download a PDF version from or Kindle Support pages here:
http://www.amazon.com/kindlesupport