I was asked about PDF files on the Kindle 3.
It handles them surprisingly well.
You can zoom in them with the AA button. But often you don't even have to, because while I still bitch a little about the (improved) contrast, I can't complain about the resolution/sharpness. In short, this is a fantastically sharp display. Even reading a Missing Manual book in PDF, which was designed for larger pages on paper, while showing small text, they are clearly legible at full page width with the screen in horizontal orientation. I had not expected this. (Admittedly it's a minus that these books, like many other modern ones, use sans-serif fonts with very thin strokes, this is not helpful here.)
There may be issues with some files. At least, I tried TidBITS' Take Control books as PDF, and it seems I only get blank pages. Odd, let's hope there's a solution to that and that it's not common.
A note on the lighted cover. It's really nice physically. And the light is very good for the small size and the small battery usage (LED lights). And it's a good solution if you like to read, but others in the room want it dark.
But the light, obviously, is quite uneven, and I find the lower third of the page much harder to read than the top. So I wouldn't use it if I have good light available.
I would say though, that if you're getting the case anyway, consider the one with the light. OK, it's twenty-five bucks more, but hardly more bulk or weight, and if you need it occasionally, it's great.
These leather cases though, double the size and weight of the tiny Kindle, so if you appreciate super-light-weight use and travel... maybe make a cover out of bubble wrap. :-)
By the way, you can get my blog on the Kindle now, at least in US and UK, perhaps Europe. You have to pay a small fee.