I read the 3.0 PHB and DMG. They were okay. I haven't been able to sit down and read the 3.5 books cover-to-cover. This stems from the fact that they're revisions, and also because the 3.x books are really dry reads. I would like to finish reading them, though, if only to say I have.

Back in the day, I had no problem reading the 2nd edition PHB and DMG. Those were well-written, even if the rules weren't 100% clear. (I never quite got a grip on how Non-weapon Proficiencies worked, until around 2002, when I went back and read it, just for kicks. Sadly, I 've not yet convinced anyone to play 2nd again yet.)
I *am* reading the DMG2 cover-to-cover, though. What I've read of Chapter One (Running a Game) is already going to affect my game, beginning with the next session.
As for the question of needing to have them memorized to be a good DM, I say no. Knowing them front to back can't HURT, but I personally tend to just use little post-it note tabs to mark the sections I'm going to (or likely to) need in the next session. Some things, such as the XP chart, character wealth by level, and traps, I find useful all the time.
Hmm... now that I think about it, I *do* know just about all of the Player's Handbook, cover to cover, though. (I've basically memorized the chapter listing, so I know WHERE to look, even if I can't quote it verbatim.)