We weren't quite ready to drop our Kindle in the pool, but as you can see from the video below, the transparent case can take some heavy spritzing, and what's nice about it is that it's thinner and lighter than some of the truly waterproof models out there (M-Edge Guardian, which we tried with the Kindle 2, comes to mind).
You can also buy heavy-duty versions of Ziploc bags (TrendyDigital's WaterGuard case, for example), which cost less and are billed as truly waterproof. But you'd be much less likely to use that type of case on an everyday basis, and it doesn't offer as much protection from drops.
The KlearKase for Kindle 3 is on sale now for $49.99 (yes, it's a tad expensive) and comes with a cloth carrying case. Rubber seals cover the ports at the bottom of the device but the seals can be lifted to access the ports. The Kindle's keyboard and buttons are also usable through the case.