One thing I've noticed about my kids reading is they do most of their reading at night. I bought my daugter the eBookWise 1150 because of the backlit screen. She would often read at night in bed then tuck her ereader under her pillow when it was time to go to bed. When my son broke her reader I replaced it with a Kindle, since I had one I thought it would make things easy for me. I've noticed she does not use the kindle as much because of the lighting issue. She rarely reads on it.
On the same note I later bought my son an iPad Touch and he uses it for everything from games, reading trivia facts to reading books.
In retrospect I should have stuck to my gut instinct and stayed with a backlit device for my daughter.
That said I would recommend a backlit device over the Kobo for your children.
There are several inexpensive backlit readers like the
eBookWise1150,
Velocity Cruz, Pandigital Novel and last the iPad Touch (not a reader but cable of reading many formats).
The first three options all go for about $100. Borders is selling the Cruz for $119
http://www.borders.com/online/store/MediaView_ereaders
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