This is one of the reasons why we should start thinking of scanning and creating colored versions of ebooks.
So far I've always made 256 tint greyscale (8-bit) covers. But we would do better by creating color ones; live with the fact that the ebook gets10% larger in filesize, and enjoy the book in color when the market opens up to color-e-reading devices.
So far the PRS-505 does not seem to show any difference between an original (color) picture, or it's 8bit greyscale version.
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