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I guess the question is do you mind paying as much for a simple device as for one with all the bells and whistles. I don't mind simplicity if it comes in at a cheap price and while $149 used to be cheap, it sadly just isn't any more.
Adding dictionaries and other "standard" features will please those that already own a Kobo but most new buyers would just expect these features as standard anyway.
Could they try moving to open source for the firmware (open inkpot perhaps) and then encourage applications writers by supplying an SDK - this would save costs and might produce some innovation. Then they could try dropping the price to $99 and offering some sort of limited deal on ebooks to get people hooked into purchasing ebooks - say 50% off any ebook for 6 months. Reducing the prices of all ebooks might not be a bad idea also. They need to do something drastic otherwise they'll soon be a memory.
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