You pay £100 or whatever for the unit itself which, admittedly, is nice to read on but is never going to match a real book and then you pay a hefty premium over the price of a real book which you can keep forever (rather than lose it due to software corruption, hardware obsolescence, etc etc)
Wrong.
Ok it doesn't feel the same as a paper book, but then it wont.
Vast majority of the time you pay less for a Kindle book because they don't have to add printing and shipping costs. EG a brand new fiction hardback could cost £15, but the Kindle edition will be less that £10, often £8. Within 20 books you've covered the cost of your device.
You don't lose your books, once you've paid for them (or got them free, there are lots for free) they are all available on any other Kindle reader if you log in as yourself.
EG, my wife just broke her Kindle, but all her books are available on her iPad Kindle app, and will be available on her replacement Kindle when it arrives.
Update: In fact her replacement just arrived, and all her old stuff is there to use. Brilliant service from Amazon and the replacement was free under the 1yr warrantee even though it was broken by the user.
As for the issue of whether you want a keyboard version... sure if you want to be able to type stuff on it then thats fine. But mostly you use a Kindle for reading. Besides if you want to search for a particular book, you can actually do that from your computer from the Amazon website and when you purchase the Kindle edition of a book, it will then be available on your Kindle as soon as it sync's (via Wifi or 3G). In practice this is pretty quick and it's much easier browsing the Kindle store on a computer.
So the lack of keyboard isn't a major issue.
But one other difference is that the keyboard version can read books to you, text-to-speech menus, play audiobooks and mp3s and it has a web-browser. It also has twice the memory of the standard Kindle.