I am writing this review from the perspective of being a long-time Kindle user vs. someone brand new to the Kindle experience. As a point of reference, I have owned and used each model of the e-Ink Kindles and Kindle Fires.
From an overall standpoint, and considering everything you get (compact e-Reader, touch screen, lighting system), the Paperwhite is a very good e-Reader. Similar to the first-generation Paperwhite, I am impressed at how much smaller these e-Readers can become as compared to a "regular" Kindle or my Kindle Keyboard yet still not feel like you're losing anything from a "feels like a book" experience.
To address the reading experience, I compared the current book I was reading side-by-side with the first generation Paperwhite as I wasn't sure what to expect with the display. The text on the screen is sharper than the first generation with a better contrast: the whites are whiter and the blacks are blacker. Why is that important? It means the text is more crisp while you are reading which is always a good thing (and my aging eyes). Compared to a regular e-Ink Kindle, the text on the screen is much more crisp than any of the other version of an e-Ink Kindle I have used, and just to ensure I wasn't being biased I put the Paperwhite next to a Kindle 3 / Keyboard, a Touch, a "regular" Kindle, and a Kindle DX - all on the same page of a book with the covers removed (didn't want the cover to give an optical illusion or anything) - and you can clearly see a better quality in terms of the fonts.
Reading in the dark is a good experience with the lighting display in comparison to the other versions of Kindle because you don't need an additional light that can get in the way: it didn't disturb, for example, my wife who likes to watch TV in a dark room; the same is true in comparison to the first-generation Paperwhite. it is also very convenient on a plane ride at night as you are able to see the full page of the text vs. a light attachment only reaching most of the screen: there are no impediments to the reading screen. Reading outside is not a problem, either, as compared to some of the display issues you may have with a Kindle Fire outside.
Turning the page backwards and forwards is as simple as a simple tap of the thumb as you hold the device or, if you prefer, a swipe with your finger in either direction.
Accessing the menu structure of the Paperwhite is also simple: just touch the top 20-30% of the screen where you can quickly access a keyboard, hit the menu, table of contents, etc. Navigation is a piece of cake.
This generation of the Paperwhite is supposed to have a processor that is 25% faster than the first-generation Paperwhite: I can't seem to tell a difference between the two models, as a page turn appears to take just as long - and I didn't notice a delay in the first place.
Something new in this model - to me, at least, as I never saw it on the first generation Paperwhite - is a tool called Vocabulary Builder, which is supposed to help you learn new words while you read: words you look up in the Kindle's dictionary are stored in Vocabulary Builder, where you can then view Flashcards or review usage examples for those words. It's not something I see myself personally using, but I imagine my kids will as they are reading about 75% of their school books for reading class or extra credit on their Kindles.
WiFi setup was easy, and it took me an extra minute because I typed in the incorrect password to my wireless router. Web surfing speed with the WiFi feature on the Paperwhite is about the same as the other type of e-Ink Kindles and the first generation Paperwhite. Doing a side-by-side test I tried the mobile websites of Fox News and CNN and they popped right up; the usual slow sites were still slower than Christmas (Houston Chronicle newspaper in particular). With the whiter whites and darker darks I mentioned above, the crispness of the web pages - especially pictures - is much improved in this model. Checking email with an e-Ink Kindle via Gmail is a chore with this as well as other versions of e-Ink Kindle, but none of that is really important to me as I have too many device that do that anyway: when I have my Kindle, I usually want to read a book vs. surf the web or check email.
Despite what people may say, size matters! In this case, the Paperwhite is not too small and not too large and Amazon appears to have hit the sweet spot. I would highly recommend the Amazon-branded case for it, as it fits snug and firm and automatically puts the unit into sleep mode when you close the cover, and wakes it back up when you open the cover. To see the cover I purchased, click this link: Amazon Kindle Paperwhite Leather Cover, Onyx Black (does not fit Kindle or Kindle Touch).
About the only negative I have for this unit, if you could even call it a negative, is Amazon continues to be rather cheap and not include a power adapter with the included power cord. True, most people have lots of adapters they can plug the micro-USB cord into, but please make the unit complete and functional fresh out of the box. Despite that statement, for just $119 I think this is a great unit and I enjoy reading with it: the Paperwhite has replaced my beloved Kindle Keyboard for reading!
If you boil down all of the whistles and bells, the cost of the unit and the cost of additional items (cover, screen protector), plus the elimination of purchasing an external light for reading at night, I think the Paperwhite is hands down the best e-Ink Kindle readeryou're your money Amazon is offering right now. If you are looking to upgrade your current e-Ink Kindle, or are a first-time Kindle purchaser, I would recommend this model of the Kindle every time.