If you want to just read books you buy, get a Kindle.
If you want to read books you buy and drm and non drm epubs (library, etc), get a nook.
If you want to read books you buy, library checkout, surf web, comics, email, get a nook color.
Kindle is a great deal, great e-ink screen - if I had to pick a dedicated and only read books I bought, I'd get this and the lighted cover. Sick battery life, it along with nook work great in direct sunlight.
Nook color is a bastard child - but I live it, at least in rooted form. I get Kindle books (kindle app), great browsing, email, games, comics. Still works great in bright light - but the glossiness of the screen is its undoing in direct sun. Biggest con is price and battery life (compared with eink).
Kindle is the best straight book replacement device. After all pros and cons weighted, I went Nook Color rooted. Pros are worth it, and no issue at all with the screen. I've read a number of books no eyestrain---even Storm of Swords.