I picked the Sony as books are not in a proprietary format and the word is that the Digital Rights Management (DRM) encryption that limits you using the books you buy is simple to break. You can also load PDF (Adobe Acrobat format) or Microsoft format files and read them.
Basically the Sony it does what it says on the box but oh so clumsy and the Mac software is positively flaky. The biggest downside to the touch screen versions (yes, the one I have) is that the contrast is poor. Not unreadably poor but you need a good light source to read comfortably. I've read Dan Brown's latest (not bad I thought but a poor ending) and am on my second novel, it's quite usable.
Unlike the iPhone the touch screen is an add on rather than tightly integrated. I haven't bothered to get the annotation working as the software is too klutzy. There no handwriting recognition which seems a ridiculous oversight.
Overall great for travelling (you know how big modern books are) and taking a collection of reading material to foreign parts. Also pretty good for cutting back on shelf space. Not a must have but overall I'm pleased so far, you can see the future will only get better though. ★★★