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Some people use things like MobiPocket Creator or just saving the Word doc as a HTML file, but personally, I don't recommend it. You might get lucky and come out with a clean doc on the other side, but more likely there will be formatting probs you aren't even aware of (some only appear on certain readers).
If you do it my way, you can look forward to reviews like the one I received from SIFT when they said "This is the most professional design - both inside and out - that I have seen since I started reviewing at SIFT".
It's worth the little bit of extra time and hassle to get your formatting perfect. It really is.
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