I’ve got the Kindle 3 keyboard, the sponsored version. I love it. I don’t use wi-fi, so no ads.
But if I had to buy an e-reader again, I’d opt for the Nook Simple Touch. Not because it has a touchscreen, but because it’s got a faster processor, and much better battery life. It’s also got page turn buttons which the Kindle touch doesn’t have.
To read epubs on the Kindle, you’ll have to convert them to mobi using something like Calibre. It’s an easy, automated process, so don’t let the lack of format support affect your buying decision. It’ll convert your books and sync your library between your e-reader and desktop.
I’d avoid the Kobo. The processor on the Kindle 3 is slow. The interface has a slight lag that gets more pronounced when doing a search. It doesn’t affect reading though.
The 1st gen Kobo however is slower than the Kindle 3, and has less RAM to boot. I considered it when I was buying my ereader, but decided it was too slow for me.