There are some specific hardware/OS differences between the two, but largely I think the choice comes down to personal taste.
Screen: The screen is the same 6" size on both versions. The Cover Story has a touch-screen, the Story doesn't. The Wi-Fi version of the Story has 16 greyscales in the display; all the others have 8 greyscales.
Hardware: Both the Story and the Cover Story come in both stand-alone and Wi-Fi-enabled models. The Cover Story has an accelerometer that auto-rotates the screen display; the Story doesn't. The Cover Story comes with a cover; the Story's cover has to be bought separately.
Software: The Cover Story comes with essentially the same OS as the Story, the same features, and support for the same document types. A couple of differences: The Cover Story can also read FB2 and Docx format; the Story can't. The Cover Story also provides access to POP3-based e.mail accounts, and an inline dictionary for the book reader.
Personally, I bought the Story specifically because the size of its case fits my big hands more comfortably. I wanted an e-ink screen rather than a touch-screen, because touch-screens on any brand tend to get obscured by reflections and fingerprints. So even though the Cover Story's extra features are nice, I don't think they're enough to be worth an owner of an original Story upgrading for. And I'd probably always choose a regular Story over the new Cover Story. But as I said, I think it's a matter of personal taste.
I hope that helps. Most of all, I think the choice depends on which features are the most important to you.
Edited to add:
Renji, I read on another thread that you like the iRiver because of its CBZ support. If that's a major appeal for you, I would think the 16-greyscale screen would probably matter, which might mean your best choice from iRiver would be the Wi-Fi-enabled Story. But where are you? The Wi-Fi-enabled model isn't available everywhere.
Last edited by MacEachaidh; 11-15-2010 at 08:51 AM.