My 0.10 worth
You don't need or want android to make a good reader. While an e-reader doesn't need installed apps, it should be an open platform that supports plugins for new document formats and dictionaries.
Hardware wise, the kobo screen (at least my h2o) is great. I would concentrate on eliminating the need for any wired connection. Put inductive charging in it (for a low battery drain device like a reader, it's a natural). Make it an open platform - focus on integration with calibre (as in, give the developers details on the API and actively help them). The PC apps for most readers suck anyway (I hated the Sony App).
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