How much would you (approx.) be able to pay per reader? I'd probably have a look at the Sony, Kindle, Nook and perhaps Pocketbook e-book readers.
The Sony readers have touchscreens, but with the exception of the most pricey model (the PRS-950) don't have wi-fi; they come with the most dictionaries (two monolingual English dictionaries, 10 translation dictionaries: French, Italian, German, Spanish, Dutch). They are also possibly the sturdiest devices, as they have metal casing (my Sony PRS-505 is built like a tank, and has thus far survived several falls, knock on wood).
The Kindle is cheaper (when paying full price. I just bought the Sony PRS-350 on sale for $129, but if I had paid full price it would have been $179); it doesn't have a touchscreen, but it does have wi-fi, and also a 3g model with free internet access. It also has a (pricey) large screen model, which would be (relatively) good for textbooks in PDF format. It comes with a pre-loaded English monolingual dictionary (or perhaps two Eng. dictionaries, I'm not quite sure).
The Nook offers wi-fi and 3g models, but does not feature the new Pearl screen that the Sony and Kindle models have. It has less battery life than the Sony and Kindle models, due to an added LCD screen at the bottom that features a touchscreen. The e-ink part of the device does not have a touch screen, only the LCD part. To be honest, the Nook has never really appealed to me, but there are people here who swear by it, so I imagine it's worth taking a look at. It does have a dictionary included (an English monolingual dictionary, as far as I know).
I believe Pocketbook offers discounts on bulk orders, so you might want to have a look at them, too. They offer many different reader models, and can read many formats, but they, like the Nook, don't have the Pearl screens with better contrast, but rather use the older, Vizplex screens.
As for sharing - I think that with the Sony and Kindle you can have up to about 5 or 6 readers on one account, so 1 book could be shared among 5 or 6 people. However, if several people were tied to one account, you'd have to make sure that the students couldn't buy books on that account without permission (I imagine that could be done somehow, but offhand I don't know how). The Nook also offers some sort of sharing feature, but I don't believe that there is any way to pay for one book and share it with more than 5 or 6 people at a time, so for each book you'd be paying for about 5 copies (or so) for the entire class. Hopefully someone with more experience with that sort of thing can give you a better answer than mine.
If you are reading books in the public domain, you wouldn't have to worry about paying for downloads, as they would be free.