In a nutshell, the Kindle would keep rebooting mid-paragraph of a reading session. It was enough to drive someone insane. The problem: Amazon's $34.99 Kindle covers---non-lighted---would damage the Kindle. Something about metal clips and static electricity.
On Amazon's customer support forum, you can see a situation spinning out of control. First Amazon was a touch dismissive. Then the groundswell of complaints heated up. Last week, Amazon went to the policy of refunds for covers and the promotional credit.
If you happen to one of these folks with a rebooting Kindle call Amazon directly for a refund. Word of the fix started to bubble up last week, but I'd guess a lot of Kindle users missed it.
Overall, the fix seems fair.