Several months ago I purchased a Kindle, and I've been using it ever since – I haven't read a single paper book since first picking up the device (though I do still read paper magazines and the occasional newspaper). At this point I have read almost 40 books on my Kindle, and my style of using it has settled down. I can make some observations based on experience:
I don't miss the paper format at all. The convenience and portability of the Kindle far outweigh any aesthetic loss.
Having an entire library (over 300 books now) that I can carry around means that I now find myself much more easily jumping around from book-to-book, reading what suits my mood and mental state.
The dictionary and word look-up facility built into the Kindle has me now doing something I did decades ago, but stopped: looking up every word I don't know. The only ways Amazon could make this feature any better would be to (a) speed it up (it now takes 10 seconds or so to look up a word) and to (b) switch to the O.E.D. as the dictionary (“antique” words are often not in the Merriam dictionary included, and I read enough older literature for this to be annoying).
The fact that I can download and read copyright-free books at no cost has me exploring all sorts of books that I'd probably never buy. For example, I've just finished rereading Gulliver's Travels (Jonathan Swift), which I last read in my twenties. I've also reread all of Jules Vernes' works that were translated to English, and I'm starting on Charles Dickens (many of which I've never read).
I'm also buying books that I might not have purchased on paper, because of the cost differential. For example, I recently purchased Decision Points (George W. Bush), and read it. I'm glad I did – I rather liked the book (something I didn't expect), and it clarified something for me: that the essential thing I liked about Bush as President had nothing to do with his competence, but rather his decency and humility. In this respect, the contrast with the current President couldn't be more stark...