Increased DPI, colour, refresh rates and partial updating, front lighting solutions, cost(!), mass production optimisation, decreased power consumption. Just a few.
You missed the biggest improvement: Increased contrast.
The 1st gen Kindle's display was a light grey resembling cheap newspaper stock. Definitely readable in decent lighting, and you could increase the font size to improve legibility if it was an issue, but not what I would call "pretty". Kind of dingy, really, and illustrations & photos all looked blah.
Current eInk Kindles' displays are much brighter looking in ambient light. Not yet as bright as the paper in a hardcover book, but about as good as a several-year-old paperback. And it is definitely bright enough to make looking at illustrations & photos worthwhile.
On top of that, the front-lighting on a very low or lowest setting will increase the contrast just enough to create the illusion of whiter paper (and if that isn't enough for you, by all means crank it up).
Great point, we work a lot with E Ink Holdings and they have a ton of IP being developed (like 350 patents) and some exciting product updates which from an engineering perspective are impressive. Their principals scientists are incredibly talented guys, pleasure to work with.
Just compare the very first Kindle to the current generation of ebook readers. They have been improved a lot, and the mass production capabilities exist now.
