I have a wall 6 bookcases wide, 6 shelves each, crammed with books. Once we got the first two Kindles we realized that in just a few months we had replaced the contents of one full bookcase. Out of the 6 full bookcases, less than one full bookcase can be considered must-keep books, either because they are unique, they have maybe a dedication, etc. The other 5 bookcases are hundreds of pounds worth of novels with a paper value of close to zero, and they take space, and they need to be kept clean, and they need to be protected against insects, humidity, etc.
And to answer your question on why spend so much money buying and re-buying gadgets? Because I can. I am willing to spend money to gain convenience. I really like not having to chase down for books anymore. All my favorite authors are selling on the Amazon Kindle market, and 99% of the time their prices are reasonable. Usually when somebody gets greedy and overcharges there's a gaggle of people on Amazon that will immediately start complaining and making noise until the prices are lowered.
Is this for everyone? Of course not. But if you are addicted to reading general fiction and you don't care about reselling your old books, a Kindle wifi is practical and very cost effective. The $114 (or what the hell, the $139 I paid for mine) is less than the cost of books and the bookshelves to hold them for even one year of my kind of reading.