Since the Amazon Kindle came out in late 2007 I think I've seen two people with the device. And that's in DC, which by any measure is more wonky than your town. But last week I saw two people with the new Kindle 2. Clearly this means it is selling much more briskly. At least that is the inference I'm going to draw from my unscientific analysis. Both people I saw last week were older, but judging by James Fallows and Alex Tabarrok, the Kindle 2 seems to be a hit with the youth as well.
The Kindle is a fine device as far as it goes, but it does present some problems for academics. Suppose you wish to quote a line or paragraph from a text. Normally you would include the quote along with the author and page number. But what page do you cite? With a Kindle you do not know where you are in a book. Amazon tells you the location where you are, so you can find your place irrespective of font size, but that's not really the same. Will this end up becoming common practice anyway? You could try using a direct quote and not citing the specific page, but that's generally frowned upon. Several online magazines and journals print a number in the text that conforms to the printed page, like so: [p. 34]. Doing something similar would make the device much more useful.
This may seem like a minor complaint, but there are lots of people who see the Kindle replacing school textbooks and many were disappointed when Amazon did not release an 8.5 x 11 inch Kindle specifically for that purpose. But, until they fix this problem, writing papers will be tough and the Kindle will remain a device for casual, linear, reading.