I've been playing around this week with a Nook Color that I modified to work as a regular Android tablet instead of an e-reader (technically CM7 so considerably more than regular Android). Its going to be a gift for my daughter when she comes home from vacation in two weeks. The goal is still for it to act as a book replacement for her when we go on trips but I've been underwhelmed by the options available for kids picture books.
The choices for picture books available on stock Nook Color aren't too bad but start to shrink around the 4 and up range. Worse, the picture books are incompatible with the Nook app for Android. So if I run a regular Android OS on the Nook, I can't also access any Nook picture books. Lame.
The Kindle app doesn't have such restrictions. However, many of the picture books are black and white or grayscale chap books with a couple drawings and lots of text. The quality level varies considerably and the choices aren't that great. If anyone's found a goldmine of kid's Kindle books I'd love to hear about them, I got frustrated by the process and gave up after a while.
The last option is the Android market. Its one I've bought several books from already because its where you find the Dr. Seuss books. The quality tends to be high for those. Other book apps aren't as good but the pricing is usually cheap.
Of all the three options I like the app market the best for kids picture books. For easy organization I use the Circle Launcher widget. Its one of my favorite organizers for android, its a great way to access lots of apps quickly.
Besides the reader functions, the Nook really works fantastic as a tablet. The first attempt to get it running was a mess because I didn't pay attention to the warnings about what memory card to use. For the kind of operations that are important to running Android you need a memory card that can do certain kinds of operations very fast. Cheap Sandisk memory cards like the ones you can find at Radio Shack are up to a hundred times faster than the premium cards you can buy online. I bought a memory card online, had the Nook crash constantly, tried again with the cheap Sandisk card and had no problems whatsoever.
The other thing I realized in getting the tablet up and running is that Amazon's own appstore is an absolute disaster when it comes to trying to install lots of apps. Thanks to the one free app a day program that Amazon offers I have over a hundred apps on my Amazon account. To get them on the Nook would mean installing them one by one using the appstore app. By contrast, there are a bunch of ways to batch process Android market apps so they don't have to be installed one by one. If Amazon is serious about launching a tablet before the end of the year they need to revamp their appstore to enable some kind of batch processing. By the time their tablet rolls out they'll have people with 200+ apps on their Amazon accounts. Amazon should make a deal with Appbrain to develop a system similar to what's already in place for the Android market, it will save them from a lot of hate down the road.