The 3G question depends on when you will use it and for what.
Do you have a Wi-Fi network at home you can connect to? Will he likely be buying all of his books at home or do you see him buying them through the Kindle itself while on the go? If you don't have a home network, he will need the 3G to get books. But if you're going to buy all your books at home and/or at places with public Wi-Fi, you might not need it.
I don't have a smartphone or any other internet-ready mobile device. The 3G Kindle has a web browser in it. It is simple and black and white and you can't do anything like Youtube on it, but I can look up things on Wikipedia, use Google Maps, check my email when I'm out, etc. If he won't want that, or already has a smartphone or something, that isn't a plus either.
The $114 Kindle is ad-supported. As far as I can tell, it has ads in the place of the screensavers which isn't annoying I assume since nobody ever looks at the screensavers, but I'm not sure how the ads at the bottom of the page affect reading. You may want to check some of the other threads about the $114 Kindle to see if the ads are annoying or not.
The 3G was the best choice for me mainly because of the free internet, and also because I travel and it's nice to be able to get what I want any time. But it may or may not be the best choice for your son.
Congrats on his graduation, thought!
