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If E-Ink keeps advancing then it should be alright. What worries me is that consumers are getting so used to LCD and color fidelity that color E-Ink won't advance fast enough to remain competitive in the market.
For readability there is no comparison in my opinion. But there are plenty of people out there who don't see it that way. One of my co-workers reads all his books on his iPhone! With that you not only have the back lighting causing eye strain you have a small print as well.
I've never used it before, is it that much better in sunlight?
I've only ever played with E-Ink devices at like, Target.
I thought e-ink was hype until I personally saw it for my own two eyes. The great battery life that an e-ink reader offers and it's fantastic readability (is that a word) in sunlight are selling points alone.
For me the biggest part is that I feel like I'm reading a book and not trying to read on a computer screen!