1. Where will you use it? This is a very important question to ask yourself because it will probably determine whether you want a backlit screen or not. If you are going to read more outside, then you want an eInk screen, if you are going to read more inside and you don’t want to have to turn on the lights, then you should consider a tablet like the iPad.
2. How will you use it? If you plan to use it to read trade paperbacks, then eInk eReaders like the Kindle and the Nook work great. If you want color magazines and interactive storybook apps, then it’s all about the Nook Color and the iPad.
3. How much do you want to spend? If you are looking to spend close to $100, then you may want to consider the ad supported Kindle, an Aluratek Libre or the $99 Kobo. If you are willing to fork over more, the Nook Color or the iPad offer additional features besides just reading that make it worth the additional dollars.
4. Where do you want to get your books from? If you looking to buy books from your local bookstore? Then you want to be able to buy through the Google app, which supports local stores. If you want to check out books from your local library, a Sony eReader, a Kobo or any tablet with an OverDrive app would do the trick. (Supposedly this feature is coming to Kindle, but we haven’t seen it yet).
5. Are you interested in interactive eBooks and apps? If your answer is yes, then an iOS or Android tablet is the way to go.
UPDATE: Since this post published, Barnes & Noble announced the Nook Touch and Kobo announced the Kobo Touch. Both are black-and-white eReaders that come with touch screens instead of being operated by keyboard buttons. You may also want to ask yourself how if you want touch screen eInk or button controlled eInk.