@Bob Russell: don't forget to tell us if you think the Sony Reader is going to be a hit or a dud!
I think it will be more successfull then previous generation of eReaders. It will get more interest and publicity, and hopefully will make more people aware of the eBooks in general.
I think Sony needs to release Letter/A4 sized model for techie ppl, just because most of the current PDFs are formatted to that size. Reflowing is not 100% solution, untill tagged PDFs created properly. Some rudementary search functionality is also needed. Could be priced at $499 level.
The eReaders functionality, imho, should still be very limited to keep battery life and weight/size under control. For advanced features there are always tablets and laptops.
What Sony can do with current model is to add Unicode support, improve CONNECT software for eazier RSS/HTML conversion, add more formats (like CHM for example).
Personally, I don't think backlighting is needed. But all future eReaders should come with warning that reading under bad lighting conditions will ruin ones eyesight. May be even have light level sensor built in to warn that there is not enough ambient light
Something along those lines