H2O display should be better than the HD. But you might not notice if you don't put both devices right next to each other... If you already had a HD there would be little reason to upgrade...
H2O is also waterproof but you can't trust it, especially not on a 2nd hand device. The water seal is easy to break (using just your fingernails on the bezel), I also had a fintie case lift off the bezel of a H2O when clipping it in.
Are you ordering these online or do you have a chance to see them in real? You could check if one had any problems (with the front light or whatever) and then choose the better one.
Saving $35 is not wrong. Getting a good reader you can enjoy for some time is not wrong either. In the end, it's your choice.
