The primary problem with Sony Reader is that it is too expensive. A new model that is $100 more expensive is counter-productive. I would buy the 505 for $150 or $200 or if I could get a $150-$200 credit for purchasing e-books.
The second problem with Sony Reader is that, for optimum readability, books need to be reformatted and resized specifically for its screen. Novels are okay as-is because they are laid out for small pages, but technical books' pages are usually too large to port over as-is.
The OLPC-provided Reader activity is very functional, but last I checked, it eats memory at a ridiculous rate. Someone recommended FBReader to me, which is a cross-platform reader app with a Linux version.
I don't understand why everyone is so obsessed with Kindle and Sony reader. I got myself a Booken Cybook and it has everything I need packaged in a very sleek design:
http://www.bookeen.com/ebook/ebook-reading-device.aspx
I haven't bought anything with Sony's name on it since then, and if I'm getting a reader (likely) it's not going to be from them.