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Formatting matters quite a bit because formatting can make a book easy to read or difficult to read. I don't know about you, but I have picked up pbooks that by title seemed interesting and as soon as I opened the book and saw the font choice, the formatting, and the layout, put it right back -- no purchasing and no reading of it.
I admit that with what I read on my Sony 505 (read-once, throwaway fiction) it is less problematic, but even so, some books have been so badly formatted (I'm not talking about spelling and grammar errors -- strictly formatting) that I didn't get past the first page before I deleted the book.
This formatting issue also extends to cover design. A well-designed cover can entice me to purchase and read (at least start reading) a book (p and e), whereas a poorly designed cover keeps me searching for a book.
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