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We have an awful lot of free public domain (pd) books here (click ebooks on the blue bar, then Sony BBeB (lrf) , all of which are much better formatted than the ones on, say, Project Gutenberg (which are the source texts for many of the books here - the wonderful people who upload them spend ages getting them into a decent layout).
I haven't yet experimented with formatting pd books myself yet, so I can't help with what programs are best.
For converting non-DRMed books on the Mac, Calibre is probably the best choice - it also lets you transfer your books onto the reader.
Also, welcome to the forum!
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