No vote, just information 'cause I don't see a clear-cut answer to your question:
If you want to read books, the Kindle Touch or the Kindle Keyboard are your best choices. Their screen is far superior to anything else in the industry (and it's not just me saying that; it's also Consumer Reports). It's like reading a paper book; you don't get the computer eye strain if you're an hours-and-hours reader. You can also read it in sunlight without a glare. And the battery life is weeks rather than hours.
The Nook is essentially the same as the Kindle . . . except that the screen isn't quite as good, and Barnes and Noble isn't as financially secure as Amazon -- better to buy from someone who's sure to be there in the future.
The Fire is kind of like an Ipad Lite. It's a more versitile item in that in addition to books, it has internet access and the ability to play movies . . . but with those new abilities come some serious drawbacks: The battery lasts only hours, so you'd better be close to an outlet at all times. The screen is useless in sunlight. And, yes, as you mentioned, the storage is very limited; renting movies is do-able, but building a collection in this machine is questionable.
You didn't ask about the Ipad. Yes, its' 2.5 Xs the cost of the Fire, but it has a great deal more storage, speed, and computing ability. However, it does suffer from some of the Fire's issues: Glare in sunlight, low battery life being the ones that bother me most. Also, something that no one else has mentioned is that compared to the Kindle, the Ipad is HEAVY! When I got mine, I thought that I'd move all my Kindle books over and have a "one stop" machine -- nope; being a lie-on-my-back-reader, the Ipad gets heavy, whereas the Kindle weighs essentially nothing. I love having email NOW and the quick internet access, but between the two I use my Kindle much, much more.
My advice: Determine exactly what you want your new toy to do for you, then decide which one you want. Are movies and internet essential? Then you have two options, one more expensive than the other. Do you really just want books? Then don't pay for more than you need.