As far as supporting the Sony Reader, all I use on my Macs is libprs500. I've had no need for anything else.
On the
questions:
You really
really need to do something about backups. I recommend using Time Machine along with an external FireWire drive (in your case). Another reasonable choice would be DataBackup along with an external drive.
.mac is a great deal if you have multiple Macs that you wish to keep in synch. For example, I have a desktop at home, a desktop at school, and a laptop that travels with me. DotMac is really useful for keeping my calendars, bookmarks, preferences, and such all synched up across these three machines. If you want to do easy Web publishing or photo sharing, .mac is pretty good. For a single machine, it's certainly not essential.
AppleCare is not worth your time for desktops and displays, but is a
really good idea for laptops. The Facilities folks at my university recommend that we buy AppleCare for all Mac laptops (and similar plans for the recommended WinTel laptops). Anything more complicated than replacing a drive or some memory will wind up costing you far more than the AppleCare did! Basically, desktops are easy to work on and don't break too much. Laptops are a PITA, and tend to break a lot more.
Xenophon