e-Ink readers are actually grayscale. Some have only 4 levels of grayscale (or less) and some have up to 16 levels. (There might be some with more levels.) My guess is that e-Ink screens have a better combination of dpi (dots per inch) and space between dots. Too much space between dots and text will look ragged.

An oddity with many color screens is that black text is rendered not in grays alone but also using colors. If you do a screen capture on your PC or Mac of a page of text, then zoom in (don't rescale just zoom in) to a portion of that text in Photoshop you will see some random color pixels which really don't seem to belong. That can cause your eyes and brain to incorrectly interpolate the text and make it seem fuzzy. If you then convert the text image to grayscale it seems easier to read. Too bad reader apps made for color screens don't have a "render in true grayscale" option.

Here is an example randomly captured from the CNN website and shown on top at 100% scale and at bottom at 400% scale. On the right you can see the colored pixels used to render a black text. This was captured from a PC LCD monitor so the iPad might look different. On the left the text was converted to grayscale mode.

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