I found a cover that works well for me. It's intended as an A5 notebook cover, but fits the Iliad nicely. Made by an Australian company called "smiggle"
http://www.smiggle.com.au/welcome.html (you'll have to skip the annoying Flash intro).
Not sure whether these are likely to be available elsewhere. I assume you could order them to be delivered.
It may not be good enough for everyone, since there is only a thick elastic band hold it closed (and holding the Iliad in place), but it seems very solid; I don't feel like my Iliad will fall out.
Note that there's nothing holding the Iliad in when you open the case. When you move the elastic, the Iliad is free to be removed. I guess one could use velcro to keep it in place, if desired, as someone else on the list did.
Anyway, I've attached some photos.