Welcome to MobileRead txcheart
You raise some great questions. I may not have great answers but here goes.
The best time to buy is always next month when they might have new models out, when they might lower the price, when they might have a special promotion. In short, we don't know what is coming. We expect that there might be new models coming, there are lots of rumors around that there is a new Kindle coming or that Sony is preparing a new reader. I have heard no rumors about Cybook offering a new reader. Yes, color is coming but the best guess is not in the next year. All of us wondered the same thing when we bought our readers. (OK, I worried not at all as I bought within the first month that the Sony PRS-500 was offered.)
As for the new models coming out, many have suggested that the Sony may add a wireless feature and the Kindle may get a facelift. What value these are to you only you can determine. While there are advances in the e-ink technology to increase the resolution on screen I have not read any rumors about the major manufacturers adopting a newer display. All of the existing readers are excellent. It is a matter of which meets your requirements best. That leads us to your next question about ebook sources.
Check the MobileRead Wiki which lists the formats each reader can use. It is an excellent resource.
For unprotected ebooks (i.e. DRM free) there are many sources throughout the web including the MobileRead free ebook download area. Lots of great public domain material -- read lots of great classics there.
Some other sources for non-DRM material include Steve Jordan Books, Fictionwise, Baen, and a host of others that I am forgetting at the moment. (Sorry about that.)
When you get to DRM protected books (and that means almost all of the current best sellers, etc.) your choices drop. If you have a Sony, there is the Sony Store. If you have the Kindle, there is Amazon. If you have a Gen3, any place that sells Mobipocket books is fine. There are hundreds of sites all over the Internet to pick from including Fictionwise.
Two formats often sold that you may want to avoid are PDF and eReader. PDF, while a great print layout format, is not an ebook format. The new Adobe Digital Editions and the reflow support on the Sony 505 make this a good future candidate. However many PDFs are sold with DRM and there is no current way that I know of for any portable reader to use a DRM PDF. The eReader format started life as PalmDoc and has evolved very little since then. While I can use it on my cell phone, none of the current crop of e-ink readers can use it. The Apple iPhone also uses it.