In reply to Philip:
I recently bought a Kobo Glo from WH Smiths (£99)which came out about a month ago. It has 1Ghz processor and a 1024 x 768 6 inch touch screen. (800Mhz and 800 x 600 are more typical). I don't know how much RAM it has, not listed in the specs. I wasn't to keen on touch screens, they usually seem like a cheap alternative to proper buttons, but this screen is really responsive. It's also one of the first devices to have a built light (front light rather than back light) which works really well to boost contrast in low light. It's so good in fact I predict that all e-readers will come with lights in the near future.
It also has a great sleep mode which uses very little power. You can wake it from sleep almost instantly - so good if you're reading and but interrupted frequently.
On the downside the software is erm, a closed system. By that I mean you can't mess around with at all. There's no way to add more apps. Apps included aside from the one book reader are chess sudoku and a web browser. It can connect to the web via wireless but no other way. Another thing missing is audio out so there's no way to play music files. You can however add more fonts if you want to.
It has a PDF reader which is OK but if you zoom in to a decent size then turning the next page is a pain. For PDFs I'd go for a bigger, higher res screen - 9.7inch.
I think it has a total storage of 2Gbs (some used for the OS) plus an micro SD card slot to add up to 32Gb more.
All in all for what it does it works really well.
If you're prepared to pay a bit more the Onyx readers are really good. Their 9.7 inch one is about £240. Has audio and is more like a proper computer in that you can add stuff and mess about with more.
There is also the first colour e-reader out now too.