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I find this all amusing. In general, I think it is safe to say that 90% of the interest in ebooks revolves around novels. There are other types of ebooks of course, but by and large they are not the sorts of books we read on our kindles/sony's/cybooks.
I will say this, the rise of ebooks means that typsetting as it is currently understood will cease to be. Even in technical manuals and text books (where formatting probably does mean a great deal more than it does for fiction) the flexibility of being able to view the book on different screen sizes is just too important to pass up.
To answer the original poster's question...
I actually have to say, that .lit has a nice advantage in that at least for baen's .lit books, the body of the novel was in a single file... so it could be converted into a single html file realively easily (using lit2html). My limited experience with epub so far suggests that it usually has many more files to deal with. Not an insurmountable obstacle to be sure.. but still something to consider.
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Bill
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