For starters, the Nook has 2 separate screens. A six inch e-ink display for displaying text, and a 3.5 inch touchscreen LCD screen below for navigation.
In addition to this, the Nook runs using Google's Android operating system and offers Wifi and 3g internet from AT&T. The Nook also allows you to share your e-books with friends and family for up to 2 weeks, something the Kindle does not. Rumor has it that Barnes and Noble will offer a steep discount for e-books (compared to a standard paper copy), and will allow access to free books via Google's Book Project. The Nook also boasts 2gb of memory and an expandable MicroSD card slot.
This is all well and good, if you are already on board with e-book readers. I'm not so sure yet. While having some competition (Sony recently released it's first e-book reader a few weeks ago) will certainly raise the playing field and push the technology further (and faster), I'm not sold completely on reading books digitally. I know the e-ink displays are said to be "just like paper" and that being able to have access to thousands of books in a single device is an attractive idea, but how many people really read multiple books at the same time? Furthermore, how many people read at all these days? Granted, I haven't used one and while I like to read, I may not be their target demographic, but still, e-readers have a ways to go before they start threatening my bookcase.