I work at a library and help people who have just bought an e-reader learn how to use them.
My pick would be Kindle over Nook because so many people have trouble with the touch screen on the Nook. The buttons are very small and many people end up being frustrated.
If the touch screen is not a problem for you, the Nook Color is awesome. It would be a better choice, in my opinion, if you were interested in things like quilt pattern books. They look much better in color.
Both Kindle and Nook are capable of borrowing books from Overdrive affiliated libraries as of now.