Here's what's new in the K3
Higher contrast screen
The Kindle 3's screen is lovely! In addition to clearer text, illustrations in books look much sharper and have more detail. The graphite case (a color option not previously available) helps improve contrast, too, I think.
This is a great enhancement. I hadn't realized the speed difference in 3G and wifi until I downloaded a previously purchased book from my Amazon media library to the Ki3 using wifi. I clicked the download link and in less than ten seconds my Kindle home page flickered and showed the new title. That is fast! I tried it from the Archived Items screen on the Kindle, and it was just as fast.
The less expensive K3 has only wifi, but I got the model that has 3G, too. Once you add a network, the Kindle remembers it. There is no menu to switch from wifi to 3G; if wifi is available, it uses that. If you send personal documents or other vendor's non-DRM'd books onto your Kindle using the email delivery, there is no charge if you use the wifi connection.
The Kindle 3 offers the standard Kindle serif font, plus a condensed version with slightly narrower letters, and also a sans serif font for folks who like that. It's also easier to set the line spacing (i.e., the amount of leading) since it's now an option on the font menu. I find the condensed font highly readable.
I say improved because I like the new arrangement, but some folks have complained. Basically, the page forward and backward buttons are now the only things on either side of the Kindle. They are much skinnier and are no longer easy to press by mistake. The Home, Menu, and Back buttons are now in the keyboard area. And instead of that square peg, the “five-way controller” is now a recessed square button with a ridge around it. You press the top, bottom, left or right edge of the ridge to move the cursor.
Voice guided menus
This is an enhancement for the visually impaired. You turn it on from the Settings options and then it reads your home screen and the menu options aloud to you. I thought it was odd that it didn't also turn on reading the books aloud; that's still a separate option that works just like it did on the Kindle 2. Also, I noticed it worked to read what's on the Kindle, but not to shop in the Kindle store. Still, this is a big step up for accessibility.
Not part of the Kindle but cool
I got the sold separately and not cheap leather cover with the built-in light. It comes in several colors, and the light is hidden in the top right corner. Once you pop the light out with the K3 plugged into the cover clips, the LED light works from the Kindle's battery. I tried it last night, reading in bed, and it worked great.
What I can't speak to yet is the improved battery life; a single charge is supposed to last up to a month if you leave the wireless off.
What's gone with K3
The number row is gone from the keyboard! You can type numbers from the symbol page or by pressing Alt and then a top-row letter, but they didn't print the numbers anywhere on the keypad, so it's annoying.
Thankfully, the K3 uses the same charger as the K2, so my spare charger and my car charger (I am serious about my Kindle!) work with my new device.
Addendum: Adding a link to an excellent Dear Author review of the K3 cover with built-in light.
All in all, I'm very pleased.