I'd be interested in a 6-7" device, although 1.1 lbs is still heavy for a handheld device (but I'd find the Nook's 12.1 oz heavy if it weren't for an easel case!).
Although, now that I've got an e-Ink device, i rarely read on my iPhone anymore, since the e-Ink screen is easier on my eyes. I can get 2-3x the reading done on an e-Ink with a clip light before my eyes start to water.
It's too bad you can't turn the backlight off on an LCD and have it be as clear as a an e-Ink, and read with an external light. Then you really could have the best of both worlds.
ETA: Apple's release cycle for product is usually January and July, so January 2011 is likely, and 1 year from the iPad's announcement.
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