Baen books has already been mentioned and I found it a really fine source for free books. I might add that the prices for those books they sell are very competitive.
Now, I don't know if you would be interested in Public Domain material, but if you are, Manybooks,net has some interesting material from (mainly) older writers and Feedbooks offers a wide selection which is worth browsing.
Another site is
http://www.epubbooks.com/. If you have Calibre it's easy to convert any of these books to a Kindle format and the conversion retains the illustrations--if there are any.