The upcoming standard format is ePub. See http://www.epubbooks.com and others. It is supported by Adobe and Sony. There is a very good free ePub reader for iPhone / iPod Touch called Stanza. From Stanza you can open books from websites. Or you can download them through the appropriate application on your Mac. Thousands of books are available in this format, both paid and free.
Adobe InDesign supports the creation of ePubs. There are also some free apps, but the ones I could find were not yet ripe. There are also some online tools. See the stanza website (how_to_create_epub) for a review.
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