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If you're going to be reading out-of-copyright classics then they can be downloaded for free from sites like this one and Project Gutenberg. Works still under copyright would almost certainly need to be purchased individually (unless someone knows of any special dispensations for educators here?)
You can share a copy of a book legitimately across some eReaders if they're all assigned to the same account (e.g. all on one Amazon account) but I assume there are limits here and I'll let someone with more knowledge answer that.
I'd suggest a set of 6" eInk readers, as this would also give you the opportunity to hold some classes outside in the California sun, and the battery life is about ten times better than that of LCD tablets. One of your big considerations will be charging up and loading books onto a set of 25 devices, so the fewer times you have to do that the better!
The 6" eInk front-runners (and thus easiest to justify) in the US are the Amazon Kindle 3, the B&N Nook Classic and the Sony PRS-650. I don't know the Nook so I'll let others weigh in there, but you can bookmark and highlight text on both the Kindle and the Sony, which both have dictionaries. I have the latter, and it's a joy to use, but more expensive than the Kindle.
I'll reaffirm your need to get suitable covers; although the devices themselves are pretty durable the screens are not, and a knock with a hard object could wreck them.
You may find you can save cost by going for smaller 5" readers such as the Sony PRS-350, which would also be easier to store and have a longer battery life, but in the UK at least these are still more expensive than the 6" Kindles.
You may also run into difficulties with some devices as you may need to manage multiple accounts on the same computer, so this might need some discussion here.
Graham
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