A recent convert to Kindle here. I still buy paper books, when there's no e-version available, but have limited shelf room these days.
Two benefits of eReaders:
1. There's a whole horde of out-of-copyright classics which are available free as ebooks. A colleague of mine bought both her sons Kindles, and they were downloading and reading avidly for nearly a year before they actually asked her to pay for something.
2. Reference links. I just got the complete series of George McDonald Fraser's 'Flashman' books on Kindle, and the ability to jump from the text to the linked footnotes/appendices and back again is very neat.
One downside is that many ebooks (especially the cheaper omnibus editions) are poorly proofread, in my experience.