I think the Kindle 3 is not that good enough. The out of box experience is terrible, the documentation stinks. The tech support is terrible and the company’s attitude is revolting.

This is a great question.  I bought a Kindle 3 a month ago or so to self-study Cisco certs, so I now have working knowledge of this dilemma.

First, Kindle was designed using the e-ink display to avoid glare and backlighting, which I thoroughly enjoy.  Some people are affected by backlights and some aren't, but I am and I tell you it's great.  This was the selling point for me, at least enough to give it a try.  Not sure how the subway/bus is for lighting, but if the surrounding light is good then Kindle is the way to go.

Second, form factor is 1000x better than having hard copy.  I love to keep my book collection at hand, and I don't have to carry around a 5-pound textbook everywhere I go, especially for studying.

Third, and most importantly, as Andrew says, Kindle is awesome for "books."  By that I mean books that are meant for reading, cover to cover.  Tech books are typically NOT meant for reading cover to cover.  During my studies for the first Cisco cert, I used the Kindle book exclusively and found it challenging to hop from one part of the book to another (such as practice questions that had answers in the back).  Perhaps this is improved in the Kindle metadata for the book, or perhaps this is improved in future Kindle releases, I don't know.  All I can say is, right now, it was not intuitive.

Fourth, your fears about graphics are true - sort of.  In my Cisco book (Kindle version, might I add), graphics were decent.  The type embedded into the images was a bit hard to read because of the small font scaling, but the rendering was legible.  If you have a PDF version of the book and either did a straight copy to device or a convert through the Amazon conversion service, graphics were pretty terrible.  If you go with Kindle, be prepared to purchase the Kindle version.

Side note: I did pass the CCENT test with just the Kindle book (and experience).

In summary, Kindle is great for normal books, but for studying you will pay a price for the form factor.  I will continue to use my Kindle for studying the material since I pretty much do read the text books cover to cover, just to absorb the info.  But, when test time approaches, get ready to bust out the hard copy.

Thanks for the great replies.  That sucks to hear that the Kindle may not be the best choice for reading technical manuals/books since I do want to read up on that material on bus rides and such but it's great to hear that it's an awesome device for regular novels & books. 

I guess the only device would be the iPad which would read a PDF or CHM with the graphs/tables as you see them on your desktop but it also comes with a hefty price tag and possible eye strain. 

I totally agree with everyone here. If you are just reading, then it works fine, but pictures, illustrations, and such are not displayed will on these devices. A tablet of some kinds works the best, but the battery life and back light are somewhat limiting.

Ironic, books on technology fail miserably when viewed on the latest technology.

If you want to do technical books, PDFs, etc., get a Kindle DX. I have one and love it, and I have yet to encounter any formatting issues. I thought the lack of color might be problematic for some graphics, but I really haven't encountered any problems there either.

The other thing that's awesome is I have the Kindle reader on my iPhone, work laptop, home desktop, and personal netbook. I have access to my books wherever I am, even if I'm only waiting in line for five minutes. Anything that has an internet connection (3G is built into the Kindle) will automatically synchronize to the furthest page read.

The downside is that I'm finding I'm now spending a lot more on books. I used to get a lot of used books that were 10-20% of the new retail price. Now you're stuck with premium pricing (not that the individual resources aren't worth it, but that stings when you're building a library of technical books). I've even re-purchased some of the hard-copies I had for the convenience.