It would need to be as good as the current kindle, and provide a reason for people to upgrade from their current Kindles or switch to it from thier tablets.
Trying to navigate a PDF on a kindle is a horrible experience - I tried a digital prog from clickwheel on a kindle and it was terrible - moving round the page and trying to zoom in not good at all - meaning any full colour Kindle would need to be magazine sized if people were going to read magazines on it - and magazines, I think, (rather than comics) are what would sell a device like this to the general public!
So, a full colour, non-backlit digital ink display, A4 sized screen and capable of displaying commonly used formats. (The Kindle can display .mobi files, as well as a couple of other formats, but not .ePub - would a colour one display .cbr/.cbz? Maybe - I think .PDF would be a must, though)
Battery life could also be an issue - I have no idea how good an iPad's battery lif is - but if it is anything like as poor as my current smartphone (a Galaxy S) which needs charging every bloody day then that would be a problem.
If Amazon get a colour, magazine sized kindle right, and price it right, then they'd have a winner I think.