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First, I don't recommend reading for any length of time on an iTouch. I much prefer my Kindle for regular reading, but the iTouch does do the job in a pinch.
The easiest way that I have found is to put ebooks that I might want to have available on my iTouch is on the bookwork\oreilly site. Unfortunately, the DRM must be removed and they must be converted to epub to do that. But they are easily accessed one or several at a time, just like a library. There are also some instructions on this site about using Calibre to provide the same function, although I have not yet tried this.
Your other alternative is to have a Kindle2 and iTouch and deal with Amazon. You can have any books that you purchase through Amazon synced to both devices so that you can read a book on either on and sync your place in the book to take up where you left off on the other device. The downside of this solution is that Amazon controls your reading content, and with their recent positon on KindlePID, other sources for ebooks may become a thing of the past on the Kindle.
cheers
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