I've used both a Kindle and a Nook and I ultimately bought the Nook. I love it. I'm not terribly gadgety, but this is, by far, my favorite personal possession. Both Nook and Kindle are easy to use, but both use proprietary formats, so I have to buy my books from Barnes & Noble or any ePub format or Adobe. It's also store MP3, but I don't listen to music while I read, so it's a bit redundant. Nook allows you to upload pictures for custom screensavers and wallpaper. The Kindle doesn't, but that a minor thing.
I just found the Nook more intuitive. I really don't like the little joystick control on the Kindle. Plus, the color screen lets you see the book cover in color, albeit small.
I did a three part review of Nook and eReading in general for AuthorScoop, if you want to read on...
http://authorscoop.com/2010/02/13/my-barnes-noble-nook-adventure-part-iii/