E-ink is one of the more unusual technologies to spring up in recent years. It's both more expensive and less versatile than LCD, a long-established product seen in everything from iPods to TVs. It's incredibly specific, but also incredibly good at its one job: reading text.
E-ink e-book readers like the Amazon Kindle and Barnes & Noble Nook offer, in the opinion of myself and many others, the best digital book-reading experience available. The battery life is astounding (the new Kindle  gets up to a month of battery life. An entire month!), they can be used outside without glare, and they quite simply look more like printed, physical ink and paper than any other display ever created. You can lose yourself in e-ink, which is about the best compliment I can give to a digital reader.
On the other hand, LCD devices in a similar package, including tablets like Apple's iPad, offer a passable reading experience on top of a whole host of features e-ink will never, ever be able to handle. E-book readers are better for books; tablets are better for everything else. So tablets and e-book readers exist in an odd sort of stalemate right now: neither can quite replace the other.
But I do believe that LCD and other, more modern displays (including Pixel Qi , LED, AMOLED, and countless other acronymic display types) will advance to the point where they offer a reading experience at least comparable to e-ink. Some have already been made--the iPad's IPS LCD display is better than expected in outdoor use, for example--and that's the wave of the future. And at that point, e-ink will die.
E-ink will die mostly because it fundamentally can't compete with tablets. That's why announcements like today's , in which E-Ink (it's a company as well as that company's main--or only?--product) claimed it will release both a color and a touchscreen version by early 2011, is so confusing. But color and interface are hardly the only obstacles e-ink has to overcome to compete with tablets: Its refresh rates make video largely impossible, it can't cram in enough pixels to make still photos look any more crisp than a day-old McDonald's french fry, and, most damnably, it's still extremely expensive.
I've used both color and touchscreen e-ink displays before. Before its untimely demise, I saw a prototype version of the Skiff newspaper reader  with color, and I've used Sony's Reader Touch Edition as well. The Skiff's color was faded, like a photocopy of a photocopy, an extremely unimpressive display closer to old four-color comics than crisp digital imagery. Sony's Touch Edition suffers from enjoyment-killing glare  and a slow response rate. While I'm sure the technology for both color and touch can be advanced, I'm not the least bit convinced that it'll ever get to the point where those features are competitive. By the time e-ink catches up to modern-day LCD (and that's assuming it ever does, which is a hefty assumption), LCD will have advanced as well.
Amazon showed that the way to make e-book readers sell like blazes is to lower the price to near-impulse-item territory. Its new $140 Kindle  sold out of pre-orders almost immediately, and there's been more buzz around the next version than can be explained through hardware upgrades alone. It's a great reader, don't get me wrong, but its incredible sales numbers are due in large part to the price cut.
Color and touchscreen e-book readers would require a substantial increase in price, to accommodate the new technology. But that's exactly the wrong way to advance e-ink--the price needs to remain as low as possible.
Why is E-Ink pretending that features like color and touch interfaces are important, necessary, or even desirable for its product? E-ink readers like the Kindle offer the best digital reading experience on the market--why muck it up with expensive and useless features?
E-ink may not have a long future, but until LCD can learn some very difficult new tricks, it'll survive. Diluting that purpose for half-baked progress to compete with tablets is the wrong direction for e-ink.