Maybe making your own eReader from a photo frame is not so hard. The Poloaroid/Ceiva PhotoMax Digital Picture Frame has 8M of flash and 16M of DRAM. It runs an ARM processor. A serial port is available on the board, so a simple serial button control set can be hacked together with a PIC processor and some buttons from Digikey.
If you want to take a shot at it, you will find the
hacking info here. This site documents a set of tools so you can load Linux onto the Ceiva frame.
Some report frames on sale in the $70 to $90 range. Does anyone know of a cheap digital frame for which we have hacking information?