I have a Pepper Pad 3, which (like the iLiad) runs the Java MobiPocket Reader and FBReader. See
MobiPocket Java Reader on Pepper Pad 3. That thread is from January of 2007, and the Java Reader (PP3, iLiad, Kindle) is still just as feature poor today. The original developer, Pepper, has gone out of business and their hardware supplier, Hanbit, is about to issue a similar device running Windows XP (rather than Linux). It isn't yet clear if the existing Pepper Pads will be able to upgrade to Windows or not.
I like the PP3 as an "armchair" reading and web browsing device, but battery life is short (~3 hrs) and I mostly leave it plugged in. I can't recommend it to anyone except a Linux expert at this point, and then only if they get a bargain price. The Hanbit Pad, with Windows, will have many more ebook reader options, but the price will have to be below $500 for it to make sense even as a niche product.