It's true that the contrast is not as good, and IIRC the color resolution is also a bit lower (but is not bad overall). But people who plan to read B/W documents could still benefit from a device like this because it makes highlighting much better, and it enables color-based reading enhancements like BeeLine Reader (which improves focus while reading).

I'm certainly biased (I created BeeLine), but IMO the color screens that Kobo is using are good enough to make the tradeoffs worthwhile. It's also interesting to see innovation among one of the major players in this space. The companies that have made color ereaders before now have been a bit dodgy in some cases, so Kobo will bring a level of legitimacy to the space that's very welcome.

EDIT: the price is also very favorable compared to other color ereaders. Ones I've considered in the past were around $420, which is roughly 2x-3x the price of Kobo's new units.