The most recent stock version of the Nook OS is 1.2 which is Barnes & Noble's adaptation of Android 2.2 (FroYo). With that version, you have three choices:
Don't modify it. You have Access to the internet, email and B&N market. Their market for apps is limited and expensive. but if you are most interested in reading books and magazines, this works just fine.
Root it. Currently you have to do it manually using Manual Nooter. You get the true Android Market and most of the apps (depending on your country) but keep the B&N functionality. This is what I've done and it suits me just fine.
Flash it. Install a custom ROM (Modified version of Android specific to that device). Phiremod is one of the more popular ones. This makes the Nook a full Android Tablet.
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