Ugh, the number of lies that always fly around with Kindle irritate me. If people love their Nooks, fine. But don't spread lies about the Kindle.
No, it doesn't read ePub. But any book you find on Manybooks or the other free ebook sites can be downloaded right from the site in most cases as the equally open-source .mobi files, which the Kindle reads without a problem. Download the file, plug in your Kindle to your computer, drag and drop.
It's equally possible if you really want to, to buy the books from B&N or some other website where you pay, change the formatting using Calibre or some other software, and put it on your Kindle. Not sure why you would bother doing that unless you find the book cheaper. So far I've found
Amazon has the same selection as any other seller for the same price, because as PP mentioned, these prices are regulated. And Nook owners can do the same with Kindle books if they want to.
I follow pixelofink.com to find my daily free Kindle books, and I find there are many other blogs that help me find free stuff too. I can't speak on the free book community for Nook users. But I have about 30 books on mine currently and I have only paid for two of them, and both of them were less than $2. So finding free books is absurdly easy with Kindle.
As for loaning between users, that is a farce no matter what device you are on. Publishers limit that feature to one loan, once ever in the life of the file. That's one instance where if you swap books with friends a lot you're better off with a paperback!

But please, Kindle has been allowed to do this for months. Stop saying it's a Nook-only feature.
Finally the last lie that continues to be perpetuated, only Nook can do library lending. Please see this official press release from April that says Kindle will be working with Overdrive (the library ebook system) by the end of the year.
http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1552678&highlight=
Truly, the devices are functionally identical. Both have free books. Both can be manipulated with software to get the books that aren't proprietary to your particular device. Both allegedly will be able to sort books with Nook's upcoming upgrade. Both can lend books. By year's end, both will get library books.
Go to the store, play with them a bit, and see which one you like better physically. Screen, button location/size. Are you a touchscreen or a keyboard user? Do you like the sorting on one better than the other? Battery life? Wireless/3G features? The hardware is really the only thing you have to make a basis on. You'll do fine with whichever one you buy.