This has also happened to me. I picked up my Kobo Aura reader to wake from sleep and the screen froze half refreshed. Nothing would reset the device. I ended up returning the device to Kobo for service and they sent me a new one. This was back in December with my first reader. Now, the same thing has happened again with a new device. The screen froze mid screen refresh and I'll be returning the new device for service. The only commonality between the two devices is that I charged each once and the problem occurred after about two months of us. I've attached a picture of the problem and a link to a short youtube video.
http://www.youtube.com/watch?v=dXtFepVJ7LI