As you may know, the current generation of book readers uses the E-Ink technology, which currently does B&W 800 x 640 on a flexible substrate. They project that color E-Ink devices will become available no earlier than 2011. Hi-res is important: readability studies shows that paper with 600 dpi is the gold standard. a 600 dpi 8 x 10 page is 4800 x 6000 pixels, which is still a pretty big image even for today’s computers.
I suspect that E-Ink devices capable of displaying hi-res PDF will be ~ 2015.
What does this mean for publishers and booksellers? For publishers, it means a (losing) struggle with e-book manufacturers over their share of the revenue pie. For booksellers, it means less revenue from simply delivering physically encoded books to people, and figuring out a way to move up the value chain–which I think is what Karl Pohrt is planning to do. I like the idea of a bookstore as a salon, but if I look around at other industries it seems that continuous physical presence is a more difficult business model to operate than old reliables like personal appearances, training classes, and consulting services.