If you are looking for exclusively an e-reader at your price point,I would recommend either getting a
Amazon Kindle (price point at $69)
Barnes & Noble Simple Touch (price point at $79)
Note that both of these display content in gray scale so there are no colors and do not have lighted background for better reading in low or no light. For the lighted ones, you have to go up one model higher (see Kindle PaperWhite or B&N NOOK Simple Touch with GlowLight), however they will cost you more. These are simple and easy use e-readers for kids and adults. I don't think they make color e-readers--unless it ones from LeapFrog or V-Tech which are made for younger children. Anything in color you will have to go to a tablet.
Given these couple of recommendations, there are somethings to consider. For my daughter who is 7 years old, she loves to read, but at her age, she still loves vibrant pictures and colors in a book, so having these e-readers presented books in only gray scale will be draw back for her. And knowing my daughter at this age, gray scale pictures just isn't appealing and soon she'd more than likely find here way back to physical books with colorful pictures. But I know as she grows older and more mature, a good story will outweigh the colorful pictures, but in time. For my 10 year old son, he could careless if the book had pictures or not, as long as it had text and a good story line, it would suit him just fine.
Holly, I get that you only want your grandkids to use an e-reader only, not for games, movies, etc... However, I would like for you to keep an open mind on tablets. Sure they do cost a bit more, but they can serve as a color e-readers, and much more. There are plenty of educational games and apps available for kids of all ages. My daughter's school as part of her homework, requires her to log into an academic Website and do math assignments and she does this all on our tablet.
As for sturdy build e-readers and tablets--I don't see many that come built abuse proof out of the box, but I would just recommend get a good sturdy case for whichever device you get. There are plenty of them out there: https://www.google.com/search?q=child+proof+tablet+case&client=firefox-a&hs=sRT&rls=org.mozilla:en-US:official&tbm=isch&tbo=u&source=univ&sa=X&ei=1a3EUf2XMIb8igLG14HABg&ved=0CFIQsAQ&biw=1280&bih=960
Anyways, there are my two cents... and I hope it helps in your decision.
I wish you the best of luck in finding something for your grandkids. There are going to be a lot of opinions on whether an e-reader vs. paper books are good or bad for kids--and ultimately it's your decision to make. For me personally, I really don't care how books are presented to my children whether on paper or digitally, because as long as my kids are reading, reading frequently, and enjoying it, is all that matters to me.
Note: This post was edited by its original author on 06/21/2013 at 1:58 PM PT