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I create ebooks as Microsoft Word docs, because that's the program I'm most comfortable with editing. (I'm working up to learning Kompozer enough to edit HTML instead.) Then I convert the file into either LRF or PDF--but I use very specific PDF settings customized for my Reader's pagesize, and my own reading preferences. I wouldn't make PDFs for strangers, and when I make them for friends, I pester them for settings first.
For long-term archiving, I prefer HTML, because it converts best into the other formats.
PDF is an end-use format and should only be considered if the specs used to make it exactly match the user's needs. Almost always, this is not the case--usually, it's made for print layout, which isn't great for any of the best ebook-reading options.
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