Sounds like a few people got Kindles for Christmas, so I thought I'd share my last couple months' experiences:
The hardware is almost flawless, and a big step up from the previous incarnations of the Kindle. The cleaner, more cohesive design is understated and minimalist. The matte charcoal finish provides better contrast to the negative space on the reading surface, making it appear closer to white. The slightly rubbery soft-touch plastic finish feels fanastic in the hand, with just the right amount of grip, and the newly consistent bezel width around the screen rounds out the device's proportions nicely. It's also light enough for easy, long-term, fatigue-free single-handed operation. As someone who spends most of the day indoors staring at glowing rectangles of various sizes, I'm a big fan of the e-ink screen. The keyboard is not particularly useful, but as the size of the screen is probably limited by cost and the overall size of the device is fine, I don't mind its addition at all. The paging buttons are well placed, not too easily pressed, and provide a satisfying tactile feedback.
The reading experience is quite good. For the main use-case of the device--reading books--the software is basically perfect. Wireless download is straightforward, storage is plentiful, book management is simple, and the syncing to other Kindle client devices is amazing. The software does a good job of staying out of your way when you're reading, while providing practical functions--like the in-line dictionary--when it makes sense. While the built-in typefaces are fine, I would appreciate a few more options, and in the absence of dynamic hyphenation, it would be nice to have some control over the text alignment without resorting to hacks. The full justification does create some awkward line spacing issues occasionally, and there doesn't seem to be a good reason not to give this control to the user. Also, the web browser is a basically a joke--though I can't imagine any web experience being particularly usable with the refresh rate restrictions of an e-ink screen--and Amazon basically acknowledges this by relegating it to the 'Experimental' menu.
What's really remarkable about the device is how relaxing it is to use. The light weight and the relatively inexpensive price of $139 alleviate a lot of the anxiety about dropping it, because it's easier to hold, less likely to sustain damage from a drop, and more easily replaced (and I understand Amazon's warranty policy is quite liberal and their customer service is top-notch). The e-ink screen, at the cost of some functionality and elegance, is not only relaxing to the eyes, but also completely kills the low-grade but omnipresent anxiety of a touch screen. Which means you don't have to worry about triggering a destructive action by accidentally brushing the screen somewhere and grip-placement is a lot less restrictive, i.e. if it's most comfortable to hold by a corner of the actual screen, you can. The physical buttons mean that you know for sure when you've made an input. And the incredible battery life means I have literally never had to think about charging the device. I plug it in to sync to Instapaper (more on this later) often enough that I've never even come close discharging the whole battery, even on long trips. And while you get used to having to deal with all of these things using a modern smartphone, once you don't have to anymore the immersiveness of the reading experience is truly unmatched.
But if the reading experience is damn near perfect, the management of reading material isn't quite. Buying books is fine (and actually does reduce the anxiety of needing to buy books ahead of time, since the entire catalog is available anytime you have wi-fi access), but trying to do anything outside of Amazon's sanctioned way is a significantly bigger hassle.
I tried a couple different ways to try to integrate Instapaper with the Kindle and have had moderate success. The first thing I tried was Instapaper's native Kindle support. There are two ways to do this natively: e-mail and download. You can have Instapaper automatically e-mail a .mobi file to your Kindle email daily or weekly, which in theory should download wirelessly and automatically when your Kindle connects to the internet. As a Kindle owner you get a free email address, and another one that will charge you for each document. I never got it to work with either email address, and I never figured out how or in what circumstances you get charged.
The second native way is to download the .mobi file from the Instapaper web site and send it to your Kindle over USB. You can use the free Kindle library management software Calibre for this. What I didn't like about this is that it only gives you the last 20 articles in your reading list. I mark way more than 20 articles every day. I also didn't like the way it manages the articles. Each day's .mobi file download is treated as a separate collection, all simply entitled "Instapaper." Which, unless you read every article in a collection and then delete it, leaves you with a library full of undifferentiated Instapaper collections. The best way I've found to manage it so far is Wordcycler. It's a simple, light-weight Windows application (it's based on the Mac application Ephemera) that sits in your tray. When you plug your Kindle into your computer via USB, it automatically downloads all your new, unread Instapaper articles and syncs them to your Kindle as separate titles, and also takes any articles you deleted from your Kindle and archives them on Instapaper. (You can also set it to automatically eject your Kindle afterwards, so all you really have to do is plug it in, then unplug it after it says it's done.)
This is nearly perfect two-way syncing. The only problem I have left with this set up is when I want to share something. There's basically no way to get an article out of this loop. What I do now is: if there's an article I want to share after reading, I leave it on the Kindle (so it doesn't archive it on the Instapaper) until I remember to share it when I'm at a computer, then go to the Instapaper site, scroll through the list of articles until I find the one I want to share, then share it and archive it. This effectively means I don't share long articles very often anymore.
It'd be nice if maybe there was a way to mark an item on the Kindle to go to a certain folder in Instapaper when it gets synced. Even better would be if there was a way to share it directly from the Kindle, maybe using the Google Reader bookmarklet, or a third-party app of some sort.
Along these lines, I wish the Kindle OS was more configurable. Having to hack it to align left, like I mentioned, was annoying. There doesn't seem to be an easy or sanctioned way to change out the screen saver images. It has wi-fi connectivity, so it feels really backwards to have to physically plug the device into the computer at all. I haven't looked at all the hacks that are available yet, so maybe that functionality is out there, but it seems like a pretty obvious thing to have native functionality for.