I’ve been using the CyanogenMod 7 (CM7) firmware on a B&N Nook Colour for a while now and it brings with it Android 2.3 “Gingerbread” to not only the Nook Color but other devices as well.
Installing the CM7 is easy by following the guide at xdadevelopers – Install CM7, OC kernel and Clockworkmod
Keeping the Nook Color up to date is easy, there are two types of updates stable and nightly, as the name implies the stable releases are stable and the nightly releases are changes made each day so it may not be as stable but on the other hand you get the latest fixes and features. Actually there are three but the third is Release Candidate and this is only available before a firmware becomes stable so I won’t include it in the ones to worry about updating as they are rarely released.
CyanogenMod has a wiki site with more information – Barnes & Noble Nook Color