Though I, too, have loved the tactile part of physical books, I've got to say that now that I have a Kindle, I AM LOVING IT! The major benefit to it is that when you travel, you can slip the delicate, thin thing into a carryon bag and have a bag full of books at your disposal! You don't have to worry about lugging around pounds of reading material when you're on a plane; you don't have to worry about the pages becoming loose, frayed, or falling out, and you don't have to worry about losing your place if a bookmark falls out! Kindle is the next big thing (actually, it's the current big thing), and I also love it because I write ebooks, and they will be sold for ereaders like Kindle, and hopefully I will become rich and famous! WOOHOO!
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I prefer paperbacks, mostly because I do a lot of my reading while commuting. Hardcovers get heavy, and e-books have way too much DRM and can't really be shared. Paperbacks can fit in my purse and are the most affordable option. I also like buying used books when I can; they have so much more character.
I am quickly beginning to love ebooks best. Although I don't like that they can't be shared, and it isn't easy to flip back to check something. Second is paperbacks. I am not a fan of hardcover. Too big and heavy.