Sure the big dog is the Kindle, but I don't like it.
I dreamed up just such a device back when I was in High School (It was Dual Screen, Color, and Used a Stylus and was approximately 11" x 8.5" when open, and the hinge could open all the way so it could be used a book folded back on itself. One screen could be used as a keyboard.) I have an Obsession for books, especially art reference books. The Kindle is missing certain things that I would like to have and I really hate that keyboard that's tacked onto the bottom.
I've hacked some e-reading capability onto my Zune, it works but isn't the greatest solution.
I was recently "forced" to upgrade my phone and am now using a Sony Ericsson. In the past I've liked my Ericsson phones, but I am an avid hater of the Sony Brand so I'm having a Schizophrenic relationship with this phone.
It took me a month to find a way to put the scriptures on the phone, and in the process of doing so I discovered many a way of putting books onto the phone—none of which were acceptable to me until I found this site presented by a Barnes and Noble affiliate. Each book is a Java application. I installed almost 200 books on my phone the night I found this site.
I was curious as to Kindle alternatives after doing so; I knew that Sony has a reader—I've already mentioned how much I hate Sony. I did however look at the Sony product, and it's not too bad, it has a lot of the features that the Kindle Lacks that I would absolutely "need," such as native PDF support and the lack of an unnecessary keyboard that takes up a considerable portion of the device in favor of touch control. But it's a smaller (6") device and I like the larger size devices because they display PDF files better.
I looked around and didn't find a lot of devices, but I did find one that fits the bill as far as features I like. The iRex Digital Reader 1000S. It's a larger screened device, has Wacom® Penabled® input (meaning you can write on it and use it as a digital sketch pad), supports PDF natively, bluetooth, usb, SDHC memory. Of course that means it has a slightly higher price tag.
Funny thing is, when I originally was researching this I couldn't find much. Then I was looking things up so I could write this I found the Mobile Read Wiki and their excellent E-Book Reader Matrix showing me that there were a lot more choices than I originally found—but cementing that I like the iRex brand. However, I also learned as I was writing this that Asus announced yesterday that they are planning to make a dual screen color e-reader, and that one side of it can be used as a keyboard priced at $165 which is cheaper than any other reader on the market—but still outside the sweet spot discovered by a marketing survey indicating $50–100 would make the market explode. That will be their high end model, they also plan to make a cheaper single screen edition that will be priced at $99 making it the cheapest e-reader on the market. Only issue with that is that they do not appear to be using the easy on the eyes e-ink screen technology (as far as the released photo—chances are that's just mocked up anyway and may not accurately depict the final product, but since we're referring to a comment made to a newspaper combined with prototype photos from a while ago, we'll have to wait for further announcement).
It's still out of my budget for the time being.