Hi, and welcome to the board.
I have both a Nook Color and a Kindle 3. I got the Color to replace my netbook when I travel. I use it to surf the web, do the email thing, watch videos, and read library books. I use the Kindle to read books.
Initially, I was unhappy with the brightness levels of the Color. They wouldn't go low enough for me so I refused to read books on it. My eyes are fairly sensitive and reading on backlit screens really bothers me unless I can get the background levels really low. The latest upgrade partially addressed this issue for me. You can now adjust the levels really low, but only if you do so by using the controls inside the reading app. They didn't fix the levels outside of the app, so they're still too bright for me. I hope they fix it soon, but at least I can now read books on it.
You can do library books, B&N books, books from other sources, the ADE thing, etc.
Your previous B&N purchases will show up if you register the Color on your Nook account. In fact, by keeping both devices on the same account, they can both share the same books.
I don't know about the sleep mode, because I never let it get to that point. Hopefully, someone else can answer that for you.
One thing to keep in mind about switching to the Color is its weight. Its heavy. By way of contrast:
- Nook Color = 15.8 oz
- Nook WF = 11.6 oz
- Kindle 3 WF = 8.5 oz
Add the weight of a quality cover and it's even heavier. Some people don't mind this, but others do.
If all you want to do is read books, is it really worth the added weight and additional $100?
But if you want to use its color features for magazines, newspapers, and children's books or its tablet features to surf the net, post on forums, do your email, pay your bills, watch movies, etc; then I'd say go for it. It's an excellent Android tablet.
If you can, do a side-by-side and hold it for awhile to get a feel for its weight. Also, read on it and adjust the brightness levels to see if your eyes are happy with the backlit display.
Bottom line: for straight reading, I still prefer eInk. Its easier on the the eyes and great for reading in harsh light with no glare. OTOH, a tablet like the Color can do so much more, if its feature set is something you need. After all, the Color is a 7" computer.
Good luck and feel free to ask more questions.