There is an excellent forum at mobileread.com that covers just about any problem you could possibly encounter with eReaders, eBooks, conversion software etc., etc.;
wikiHow has a well-written article on choosing an eReader and wikipedia has a good chart comparing eBook file types, but here are some observations from my own experience.
There is a bewildering range of devices that you can use to read an eBook. Every person uses theirs in a different way. I have yet to meet an owner who is not evangelical about the superiority of their own device. Nor have I met any who regretted buying one.
The most important aspects you need to consider are how, and where, you will use yours. At home, on the move, on the beach, in a cyber cafe?
Do you need long battery life? The ability to read in sunshine or in the dark? Will it fit in your pocket/handbag/briefcase? Will you run out of books or need to pick up emails outside your living room?
Memory size and how you buy eBooks are not generally an issue, despite what you may be told in-store.*
Once you have decided how and where you will read the best place to start is to find someone who will let you try theirs out for an hour. Failing that, go to John Lewis, W.H.Smith, the Apple Store etc. and play with the ones on display, bearing in mind that they often only have free, badly-made books on them and, clamped to the security system, weigh more than they do in real life.
There are only three choices, but none is all things to all men.
1. One of the Kindles
2. Another brand of dedicated eReader
3. An expensive tablet
A cheap tablet (under about £250) is not an option, eBooks work on them but they all have a woeful battery life and the screen has the wrong proportions, whichever way you hold it. The same is true of mobile phones, which are also very small. If you can afford an iPad, install the Kindle app and books with colour and illustrations look spectacular, but it does strain the eyes after a while. iBooks is better at understanding how the book is formatted but you are stuck with whatever size it thinks pictures should be.
Whichever you choose, play about with the settings until you find the most comfortable font style and size. Some readers also allow you to change the margin size and the justification. Often the factory settings are odd, removing all the publishers careful styling for example. This is particularly true of some of the more obscure free software that you can install on PC's and tablets.
A warning. There is one brand of eReader (available from a High Street chain) where 'links' within books do not work because there is no method of 'clicking' them. The touch screen only changes page and there are no buttons to press! It has a soppy 'next chapter' system, but the only other method of navigating a book is by using the hard to find Table of Contents (TOC). It is also not very good with full-page illustrations. Unless you only plan to read novels, and only cover-to-cover, look elsewhere.
* Myths about eReaders.
'this one is the best because you do not need a computer to download books' - If you don't have a computer you may not be able to set up a payment system to buy books, or even re-charge the battery.
'this one is the best because you can buy books from anywhere' - Almost all eBooks are available in a format for every eReader.
'this one is the best because it can play music and videos' - So can my mobile phone.
'this one is the best because it has a colour screen' - Traditional books have black print on white paper.
'this one is the best because you can borrow books from a library' - The current shambolic selection process, poor quality and availability make this a non-starter round here.
'this one is the best because it has a touch screen' - Tapping a screen covers it in fingerprints and may mean you cannot easily read one-handed.
Reading easily with one hand is the greatest benefit of eReading for me. I can hold a cup of tea or 'strap-hang' on the tube with the other hand.
Probably the biggest myth of all is that once you have 'gone over to the devil' you can never go back to print. If you love reading you will love the convenience - on the beach, on the tube, waiting at the dentist - you now have not just just one, but as many old favourites and new releases as you can afford, in your pocket. It's a different way of reading, not the only way.
Finally, please buy a cover or a case. You don't need to pay more than you paid for the machine, a cheap 'sock' will do the job, but they do need some protection when not in use. And read the friendly User Manual, the quick-start guides are sometimes more confusing than helpful. You can download most of the User Manuals before buying anything, if you really want to research the differences.