Does E Ink display go without saying?
Ditto on basic features like HTML, RTF, PDF, TXT support. USB connection to PC/Mac. Storage card slot that can take up to 512Mb at least. A5 display size is good, with ability to rotate display and configure page buttons appropriately to read upper/lower half of PDFs, for example. PCMCIA slot that could take a modem, ethernet, or wireless card would be a "very nice to have."
Critical features: touchscreen (need not be wacom), search (including in PDF), Highlighting/bookmarks, some basic HWR software (e.g. Vision Objects) could be an add-on for extra cost. User-replacable battery in a standard format strongly preferred.
Most critical: Completely open-source Linux with full SDK, so we can port whatever we want to it, e.g. dotReader. This must include easy recovery to base state. JTAG support strongly preferred.
DRM is optional for me, but if we could only have one DRM choice, I would vote for MobiPocket because of the Amazon connection.
I don't really care about audio support.