Matt Hickey has the scoop on this round of free Kindle rumors at CNET:

There are more rumors fluttering around Seattle that at some point, likely the holiday season of 2011, Amazon will start giving away its Kindle e-book reader for free, likely to select (as in Prime) members. And as the e-book market expands, the possibility is looking more and more likely.

There's been talk about Amazon making this move for at least a year now, but chatter has recently reignited (with graphs!) about the free Kindle. If Amazon does give the Kindle for free to Prime members, that would continue with their recent trend of adding benefits to Prime memberships (they made a Netflix-like free movie streaming plan available to Prime customers earlier this year).