I've messed with a nook (my college tries hard to sell nooks to the students because our book store is Barnes and Noble run) and while they are neat, they are not a device on par with android tablets or ipads. The nook will never be a legitimate platform unless they begin selling them with android on them.
Yes, I do believe Barnes and Noble should abandon the Nook. Barnes and Noble is a business where they sell paper and hardcover books...not electronics! The Nook is just going to reduce their sales, and it is not promoting the sales of their products at all. Although the Nook is probably a profitable product, it does not represent their old fashioned way of reading.
The Kindle, without competition, would have even higher prices and even less competition. While I do not think that the Nook is highly competitive in business, some competition is better than no competition. I think that the Nook may be bought out by Kindle before it gets shut down by Barnes and Noble.
I do not think that Barnes & Nobles should give up on the Nook. It is a great product and I know many people that have them. What they need to do is improve their next version of it so they can be better suited to compete with their competition.