Amazon has already released a color-screen e-reader to the market. But that just happens to have a LCD screen. The company was supposed to adopt color e-paper a while ago. It may be ready to do so this year. According to DigiTimes, Amazon could make that move as early as the second half of 2012. It has taken the color e-paper technology a lot of time to catch up though.
E-ink did show its latest color screen at the IFA conference last year. Triton displays are low energy displays capable of displaying 4096 colors. At the time, it did seem the technology needed some work to be ready for prime time. But we have already seen devices such as the JetBook Color that use it.
Amazon has decided to wait before the technology is 100% ready before rolling out color-screen E-ink Kindles. That could very well be later this year. The bad news is we have been hearing these rumors for a couple of years now.