I was wondering when this would happen. eInk announced a prototype 12 bit color eInk screen back in December 2006, with volume production to begin in 2007. It never appeared, which led me to believe that either eInk had problems moving from prototype to mass production, costs were higher than OEMs wanted to pay, or results didn't meet expectations.
Judging by the description of the Hanvon effort, it sounds like what they are using, and the last was the case. I'll reserve judgment until I see an actual device using this, but it sounds like the color simply wouldn't be good enough for my purposes. If I'm reading stuff that requires color at all, it requires something approximating accurate reproduction, with bright and vibrant colors. I don't need video or animation, but do need to see color art that looks like the original, and not a washed out copy. I heard the comments from Sony's Steve Haber as NY press events I attended for MobileRead, and I concur with his feelings.
Given that Hanvon produces mainly for the Chinese market, I expect this will do well for them. I don't expect a lot of penetration over here.