I've played around with PDFs on the Kindle, but only for chords. If I need to make a note of song words, I find that the physical act of writing them by hand in a notebook (I use the little Mouleskin ones) is actually a great aid to remembering the words. While I'm learning the song, I refer to the handwritten text then, when it gets into my brain a little better, I can close my eyes and visualise the handwriting.

I've also used Calibre and found it very handy for converting e-text from one format to another - in my case, PDFs of chords to the Kindle/Mobi format. The main problems are with my screen size - I have the smaller version - and the inability of the Kindle software to resize the PDFs with enough variation.

In the end, I started another notebook - for chords - to be used for material I'm asked to accompany only occasionally!