I keep as much as possible in the RTF format (sometime DOC depending upon the source I receive it in.) Everything else I try to convert to RTF while I have the tools (and the time.)
I have started to use Book Designer for books loaded to the Sony Reader as it produces much smaller files. On one recent conversion the resulting LRF file was less than 10% of the size of the RTF and the LRF had cover art that you could see as well as a TOC. (I am still learning Book Designer and it runs almost on default settings so I expect it will get better as I learn more.)

We've found HAL; but, where is Dave?