Ars Technica reports that Amazon's Kindle 2 is automatically receiving a firmware update (as long as you have its wireless service on) that enables native PDF viewing, complete with rotation for a wide-screen viewing option. It's still not a good PDF reader (no bookmarks or links honored), but it's a step in the right direction.
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The biggest drawback for me is that there's apparently no zoom function (or it's too well hidden) which rules it out for ebooks formatted to standard paper sizes. I have the smaller screen Kindle (the only one available in Canada) & even in landscape mode the type is too small for these tired eyes. Maybe the larger Kindle (DX?) in landscape would be ok?
Maybe this means eBook publishers will have to adapt by offering smaller page sizes or HTML versions (HTML page rendering adapts to page width dynamically; as well the Kindle offers some font-size control).
The Kindle DX does shrink the size of PDFs slightly to get them to fit, but I didn't find it troublesome with our ebooks. Then again, we use a large type size for just this sort of reason.
I strongly doubt most publishers will change their PDFs for the Kindles; if they're going to aim at the Kindle in general, they'll go for a native format.