I love reading in bed! In fact I’m about to go do it! 🙂 It’s a great thing, especially when it’s raining or snowing.
Really, I can read anywhere. I love to read, full stop, in any location (except when I’m driving. :-D)
As for looking up words: if I’m reading on my Nook, I can look it up right there and then. If I’m reading a “real” book, I usually write it down and go look it up later, tending to rely on “context clues” (cue my fourth grade teacher!) to discern the meaning of the word. (More about my Nook later.)
I too usually listen to just classical. Music with words tends to distract me, unless it’s opera, in which case I can put it on because I just let the foreign words wash over me.