I use my ipod Touch as a e reader, I download from fictionwise and booksonboard, price is in $ so usually works out cheaper. I was going to buy a dedicated e reader but then discovered books on the app store so ended up sticking with the ipod Touch, as I quite like the size of it and I already had the ipod. Stanza is the initial app to download. It's good because I always carry my ipod so always have a book I can read if I want one.
The Sony reader is a good one though I believe you are limited to where you can get books from. There are other makes on the market I think the Elonex version got a good review.
The other one to seriously consider is the
Amazon Kindle, this has the ability to be able to download anywhere as it runs on the 3G network (I suppose as long as there is a signal). It has been much acclaimed. Currently you can order it from the US and it is the US version. Amazon has struggled to get a UK version introduced here because of our different telecom companies, you can still use it here though. It is ordered through the Amazon UK site.