Nook Simple Touch. You can get one with backlight for less than $40 usually.

It takes microSD, android 2.1 (lol)

There's an easy app to root it, then you install whatever (fbreader, moon, etc), or use it's built-in reader. The ancient android version means you'll have to dig for apks that work with it, but once it's set up, it's done.

The biggest draw vs newer stuff, is.. it's tiny and light. there's almost nothing to it, it just works. No browser, no apps, just book.