I usually have to suppress my gag reflex while writing about Digitimes rumors, but this time around I'm going to go out on a limb and say that
they're probably correct. I've checked with my source at E-ink and he has not yet denied this story. This particular source is the one that told me that told me that confirmed that Sony has interesting plans for E-ink screens. He would know about this new Amazon contract, and the fact that he hasn't denied it speaks volumes.
Update: My source just now checked his email (it's a holiday) and called me. This is absolutely not true. It is a complete and utter fiction. In fact, I have been told that Amazon couldn't be shipping a color E-ink Kindle for at least the next year. That's how long it would take to set up production line, which hasn't happened yet.
E-ink has reportedly been ready to make the Triton screens for some years now, but it wasn't until last summer that the screen finally hit the market in China. This was the 9.7" Triton screen, not 6". The same device has recently started shipping in the US and Russia as the Ectaco Jetbook Color.
I have a Jetbook Color, and I really hope that the Kindle Color doesn't have a screen that is as gray as on this ereader. This isn't a light gray like you might expect on one of E-ink's screens; it's more like a medium to dark gray. It's actually darker than the screen on the original Kindle.