I think you will find a world of difference in that device against the Nook Color. The screen being the biggest factor, both in resolution and type (capacitive). That isn't to say the cheaper device isn't useful, it could serve as an LCD reader quite well, but think of it more like comparing a no-name brand MP3 player to an iPod. That is the quality difference we are talking here. If you are truly looking for a multi-function device, and not a dedicated LCD reader, then that device might even be better for you. On the other hand, if you want the best possible LCD screen for reading, I would say the Nook Color.
Seriously though, that device at KMart being $139 is not worth the price when you can get a much better device for just a little bit more.
This one here is what I'm talking about. If anything comes close to being a competitor for the Nook Color in price and quality it is the Archos 70. The NC has a better screen resolution for $50 more. Coincidentally, Archos will begin to sell the 70 in the US on November 19th.
They know who their competitor is.
I have been down the road of cheap tablets, many times, and I think I'll stay off it now that brand name companies are starting to enter the fray. Just wait. They will have to lower prices on some of these more expensive ones soon.
Check out this one at Best Buy. Keep an eye on that one, it WILL go down, and soon. I've held it and it is very nice (but I am far more excited about what is inside the NC).