Actually it depends on how you use it. It's just like computers, TVs, tablets, Ipads, cell phones, etc, nook color can do some bad effect on your eyes, but if you use it properly, for example, don't stay on that for a long time, it will be okay for your eyes.
We can't say that reading on the nook color is bad for the eyes. But we can not deny that long time spend on reading on nook color is bad for your eye health. If you reading on nook color without break, it will cause eye strain, eye tired and headache etc. Besides, the screen of the nook color will release reflective lights that can also cause harm to your eyes. So, if you read on the nook color, just take a regular break.