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We have both in my house. I went with the Nook - I prefer the more universal epub, a little bit. At least it is sold at different stores. Conversion works, but not always perfectly.
I also prefer the replaceable battery (I think sarahsbloke should try replacing the battery in her unit), the memory card slot, and general attitude towards openness. The LCD screen is a bit slow to respond, but the e-ink screens are laggy anyway. It makes it more flexible - as we've seen with ipod touches and the like, a touchscreen LCD can be adapted to multiple uses, and I prefer it to the whole keyboard on the Kindle.
The wife has a Kindle 2 though. She prefers the ease of use, loves Amazon, and doesn't really feel like price shopping on the books too much. She is willing to put up with DRM for saving space on her admittedly crowded bookcase (I'll strip the DRM from her books when I get some time).
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