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I have bought and read quite a few fiction books from self-published authors -- primarily at Fictionwise, but also at other ebookstores like Smashwords as well as from MR-participating authors.
Generally I make my decision based on the description of the book and reading a few sample pages (or whatever, in Fictionwise's case, is posted). What I won't do is spend more than $5 on an author I've never read before and I won't buy any that are DRM-laden.
I consider books that I buy to read on my Sony to be throwaway books, that is, read once and delete. Because I spend a ton of money every year on books, I am willing to gamble a few dollars on an unknown. Sometimes that unknown turns into one of my favorite authors and I end up buying all I can by that author or adding the author to my buy hardcover list. For example, Lawrence Watt-Evans, David Weber, and Richard Tuttle are three authors whose work I have enjoyed so I buy whatever I can that is written by them and in the cases of the Watt-Evans and Weber, I now buy new releases in hardcover (I would do the same with Tuttle but he releases only ebooks as far as I know).
Like Elsi, I also try the freebies but I only download freebies of books that look interesting and are in genres that I read. I don't, for example, read horror or romance so I never download books in those genres.
More problematic for me are nonfiction books. I rarely purchase a nonfiction ebook from a self-published author. I'm just too uncertain about the quality of the research. I prefer to buy nonfiction in hardcover at my local B&N where I can either peruse the book in depth or if I special order it, I can return it if it isn't what I expected or the scholarship isn't present. I think self-published nonfiction is currently a real Achilles heel for ebooks because there are no reliable sources for reviews of those books.
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