I have not had the opprotunity to sample either device, so I am just judging them based on the specs the companies have provided to the public and some demo videos. Click here to learn more about the Nook and click here to learn more about the Kindle. There are also a bunch of other competitors out there too, like the Sony Reader, the Cybook Opus, the BEBook, and others.
I think there is enormous potential for e-readers to change the way people read and distribute content. It is unlikely that print materials like books, newspapers, and magazines will completely disappear anytime soon, but the advances in digital readers are promising. Previous criticism that reading from a portable machine with words on a screen will not match the experience of reading from a hand-held printed book are proving to be unfounded as technology continues to get better and addresses all the concerns readers have been voicing.
The issues holding up universal acceptance of e-readers seem to be based on power supply for the devices and business models to make everyone happy (publishers, authors, consumers, manufacturers, distributors, retailers, etc.)
So far, I think the Kindle is still the frontrunner, mainly because of its smooth interface and free wireless Whispernet service. The Nook has some advantages, however, including the capability for expanding memory (although this does make the device slightly bulkier than the Kindle) and the color touchscreen menu (although the main reader screen is still shades-of-gray).
The color option is still a key issue for me. Black-and-white is fine for text-only requirements, but my reading material spans beyond that. I want a device that shows full-color magazine and newspaper articles, book illustrations, graphic novels and comic books, and most importantly, Web sites and blogs. Black-and-white is not enough, and the current technology (especially the battery life necessary to keep such devices going for hours, let alone days, without the constant need to recharge them) is nowhere near where it needs to be yet.
Hopefully progress on improving this technology will not be hindered by the commercial interests of fringe groups, although they all have valid concerns for their continuing businesses. With three behemoth corporations (Sony, Amazon, and Barnes & Noble) driving the marketplace, it seems like positive advancement will continue to be made. As an avid reader and book collector, I look forward to what they have to offer.