I do most of my reading on physical books, but I have the core of my library on a Kindle as well, and where it shines is search. I can phrase and keyword search the larger part of my library. It has become an invaluable research tool. I also import highlighted passages into a database on my computer. Granted there are things like books.google.com, which I could use for search, but that's not my library. I also prefer to read on a Kindle compared to my monitor, so I regularly email large documents to it. My wish for the next Kindle is for it to be faster (more responsive UI) and handle even larger libraries.

my bedroom theory is that our brains like to associate physical stimuli to ideas, and flipping through pages is a lot more giving than typing a page number or swiping.