I don't know about textbooks (I haven't been a student in a few decades) but I'm chuffed to bits over my Kindle 2 for just general reading. PDF handling is pretty solid -- I loaded all the Snow Leopard OS X Server doc PDFs on mine and have been reading them that way. No significant formatting problems at all.
It's completely replaced dead tree books for me in nearly all cases.
I will just say this... If you read at all, you will love the kindle!! It has really changed my life! (used to carry 3-6 book around at a time, now I only have one!)
Do a search to make sure the books you want to read are available for the Kindle. Some authors avoid e-books (no Harry Potter, for example).
If it's got the books you want to read then you're good to go.
You can take clips of books (and loaded PDFs) but it doesn't do any inline display and the interface is clunky. The refresh on the electronic ink display makes typing and scrolling tedious.
If you expect to do that sort of thing a lot I doubt you'd be pleased with any e-ink based reader.