Your Kindle is out of warranty, you admit you don't buy a lot of books from Amazon yet they've still offered you the £69 Kindle for £51? I'd say that's pretty good, in similar circumstances I'd certainly be very happy if they offered me any kind of discount.
Try doing the same thing with a Kobo or Sony and see what kind of response you get....!
If you're still planning to go ahead with the screen replacement on your old Kindle, have a read at this thread on here from just a few months ago:
DIY replacement of a damaged Kindle 3 screen