@claracamille HOW do you "loan" books back and forth. We have two Kindles and haven't figured that one out yet.
There are TONS of free books. I just got a DVD with over 10,000 free books, and it was GREAT seeing what was available free. My feeling was that if I only got three or four books I hadn't read, it was worth the $5 price (including shipping) and to my great surprise there are HUNDREDS of classics that I never read, so I am reading some of those now.
Also, Google "Calibre" (that's the correct spelling) and you can change any books reader file to a kindle friendly .mobi for your kindle, ie: .epub to Kindle, or Kindle to epub, etc. It's free and easily available.
A good source for free books is Project Gutenberg (again, Google for the correct address) with tons of great free books, all in one place.
I have also found a hack (open source) to remove the adverts on the Kindle 3 Special Offers Version (available from Walmart, Target, Amazon for $117) but decided that they didn't bother me a bit, so I left it alone.