Image persistence is a problem with LCD and plasma displays where if a certain image is displayed continuously on the screen for a long time, it gets “burned in”, which means even after the contents of the screen change, you can still faintly see the previous image on top of the current contents of the screen. Unlike screen burn-in, this effect is temporary but can still be annoying.
This issue was common on plasma displays but was greatly reduced on LCDs. It seems, however, the display on the new Nexus 7 is not one of them.
As the folks over at Android Police discovered, some of the developer units that were given away at Google I/O suffer from severe image persistence issue. They tested this by keeping an image on screen for two minutes, after which the image was vividly visible even after the contents of the display changed. The ghost image was then said to be visible for around two minutes on screen before it faded away.
Now it is said that LCDs, IPS panels in particular, have a bit of image retention issue. However, none of it is ever this serious. Android Police got a response from ASUS regarding the situation and they say they have been unable to reproduce the issue on production units (the I/O devices are pre-production models, apparently), so hopefully the units you will be able to purchase later won’t have any of this image persistence business.