If a 6" screen is good enough, then I suggest you wait for the next generation devices from Hanlin and others. The new Hanlin will have a touch screen and will support annotation. There are few details, but see New BeBook eReader: adds Wifi and touchscreen!
and BeBook 2 e-reader revealed and in the wild at CeBIT 2009!
. The BeBook is a Hanlin, which will be available under other brand names as usual. The components are not exclusive to Hanlin, so other vendors (Bookeen, Netronix) will likely be introducing competing devices. These all use the Epsom controller and so will likely have 16 grey scales.