Need Good Electronic Reader for 4-6Yr Old

My kids are 5.5 and 2.5 (both winter birthdays). The older one got a Vtech Vreader last Christmas and we got the younger one the same thing over the summer for traveling. It really saves my sanity on long car trips. It is recommended for ages 3-7 but my daughter can do it with help. It is all reading focused but there aren't a huge number of "books" available so it might get boring if used all the time. In our house I keep it aside for car trips and sick days.

All I can do is tell you what not to get, and that is a mobigo, I got one for my son who just turned four over the summer, it is not at all educational and strictly game play. Don't get me wrong, he enjoys it, but I thought there would be more educational value involved.

My first grader had a lot of success with the Tag Reader. It can read to them, read specific words if they get stuck and also has games and other interactive things within the books. I'm not sure how similar that is to the Leap Pads so I can't tell you if it's worth the additional investment.
He also loved starfall.com on the computer to learn letters, sounds and reading.

Vtech Reader is nice-fun and durable- but it eats batteries like crazy. One good session playing with it (an hour-hour and a half) and the batteries are nearly dead (4 double A's down the drain). We did pick up an adapter cord which helps and is highly recommended.

Why not just get a Kindle? Maybe not quite as 'fun' per se as the Vtech Reader for their current ages, but you get a lot more for your money. I'm eyeballing the new Kindle Touch which comes out next month as a Christmas present (as are a million other people I'm sure). Mainly, because I think my boys (6 and 10 - both reading) will get frustrated without the touch screen of the 'regular' kindle, since they are so used to my iPhone and iPad. I'm able to check out books from the library using the Kindle software on my iPad, which is free and super convenient. It would last a lot longer both physically and age-appropriately than the V-Reader. As long as you have wi-fi in your house, you won't need 3G or anything fancy. Just my $.02

While I think the new educational electronic toys are great for the most part, I have to state the obvious here...why not just get them some real books! They will be just as stimulated, if not more, being read to and reading independently from an honest-to-goodness book. The library is free, so get them both their own library card and teach them how to use the card catalog on the computer and get to know their librarians!
My daughter has a Leapster game system as well as the LeapPad reader. She prefers real books. A fun read-to-me website is tumblebooks. Check them out, they are a lot of fun.