I got the Kindle 3 just last month. The main reason was because a lot of people was saying the K4 had a slightly lower contrast and shinier screen than the K3 and no physical keyboard.
I have checked out the two side by side at Best Buy (k3 and K4 they did not have the Touch). The background of the K3 is slightly lighter making the contrast between text and background a hair greater - advantage to the K3. As far as shinier screen, if there is a difference it is insignificant as I played with both at different tilt angles to the lights and there was no tangible difference.
My K4 arrived yesterday and I have been playing with it all night and I couldn't be more delighted with this device. Very easy on the eyes for reading - much better than a iPad or Fire would be - but I purchased it as a dedicated reader not to watch movies or the internet.
I am very happy that I got the K4 instead of the Touch as I found myself going back and forth between pages a few times to re-read a previous sentence. A K3/K4 makes this easier while a Touch would be 'slightly' awkward as it may require both hands or readjusting the grip - not so with the K4. I found the keyboard very easy to use and it scrolls through letters very fast - and also wraps around which is nice.
The K4 (and Touch) are easier to hold than the K3 but if you plan to do a lot of typing and take notes then the K3 would be a superior choice. The Touch is also slightly larger than the K4, about 0.2" wider and 0.3" taller. Not a big deal but a slighter different fit depending on the sleeve or holder one gets. For example, I will probably get
this sleeve for my K4 - too small of the K3 and some reviews have it as a almost too snug a fit for the Touch but those reviews hope that it will break in. If you prefer to use your Kindle naked then a sleeve is a better choice than a
Cover which add a bit of weight but it is all personal preference.
Also, the wall charger/power adaptor for my iPhone works perfectly with the included USB cable for charging. To keep the prices down that is a
optional $10 part which is not needed for iPhone users - or anyone with a computer to charge off that.
The adds don't pop up while reading.
Bottom line this is a wonderful device, easy to use, easy on the eyes (very important to my old eyes). If you type a lot get the K3. If you are not sure get the Touch, if you will type only as needed then the K4 is perfect and you will not need to be concerned with prints on the screen. Also, the K3 'flickers' more, like every page turn while the K3/Touch flickers only every 5 or so page turns - a small thing that but less flickers makes for a slightly smoother reading experience.