As the folks above have said, the Reader is perfectly happy to read any PDF files you create. I've got one that has my search list of history books on mine, for handy use in used bookstores.
You don't want to get me going on DRM-restricted files; suffice it to say that I'm one of those who thinks DRM is an abomination. Its entire stated purpose is a lie -- it doesn't even slow down piracy, it just enforces platform lock-in.
As for where else to get books: I buy from Baen/Webscriptions, BookView Cafe, BeWrite, etc. There are quite a few DRM-free bookstores out there. Plus there are all sorts of places to get free ebooks, especially if your taste in books runs to the bestsellers of 100 years ago (now called "classics") as mine does.
Right here on MobileRead is a good start -- the ebooks are built by hand by MobileRead members, and in my opinion they have the best formatting. There are a lot of other good ebook sites out there. Here's my personal free ebook source list:
- best formatting, limited selection (hand-built by MobileRead members)
- PG scraper, but sometimes has books from other sources, good formatting
- mostly scrapes PG, improves formatting
- the granddaddy of them all, phenomenal selection
- painful to use, but has books nobody else does
the Internet Archive
- generally only the scans are readable
- most of the time, what's good isn't free, and what's free isn't good
Baen Free Library
- amazing selection; also, they will
tempt you into buying books
- Baen CD collections
. Sadly, it's not a very comprehensive search engine, at least when it comes to free ebooks - it misses a lot of them - but as far as I know, it's the only ebook-specific one out there.
If you're using free ebooks, it's only right to give something back: proofread a page a day at the Distributed Proofreading Project
I almost forgot: get calibre
. Its support forum is a few boards down from here.