Caveat - all this is just my humble opinion...
The simple answer:
...to the question 'What is the BEST format to read novels in??'
FB2 is the BEST format for reading eBooks...
FB2 is pure XML, it can be zipped to save some space (but each book is generally less than 1MB unless you have heaps of pics), and describes only the content of the document/book, leaving all formatting/display control to the reader software. Luckily there are some excellent readers out there, naturally free and fully developed/supported (why can't corporations do that?) - the main ones being FBReader, CoolReader, Stanza and Haali Reader.
The details...
There may be some situations/books where you want some of the more advanced 'features' of an ePub, that's assuming they have been implemented correctly (which, adly, is often not the case).
Frankly, the ADE reader for ePub seriously sucks. As usual, the big corporations and publishers have done half a job in their frantic rush to get your eBook $$$. The format has lots of potential, but the preparation of the books themselves is often inconsistent and riddled with errors, and the reader tools (ADE only for DRM) are inadequate at this time. And whilst FBReader can handle non-DRM ePub it is not quite up to the task for formatting them well (I have no doubt it soon will be).
I come from 6 years of reading FB2 on various devices with various reader programs. It has always been the superior combination for a stable, pleasurable reading experience. Primarily because it allows full user control over how the book looks on your device.
On my old Acer n10 PDA/PocketPC I used Haali Reader with FB2 books I created from Mobi, MS Lit, HTML, DOC, RTF, etc. Always way better than reading the native Mobi or Lit.
On my BeBook (Hanlin V3 clone) I read FB2 on their CoolReader implementation, and converted again from sources such as ePub, Mobi, Lit, DOC, RTF, HTML, etc.
On my PB360 again I use FB2 via FBReader, and convert from ePub, Mobi, Lit, DOC, RTF, HTML, etc.
I cannot read ePub or Mobi in their native readers, not after using FB2. They are just too inflexible, and their formatting generally sucks. I guess I could force myself to get used to it, but there is no comparison (to me).
Frimware updates to the PB360 apparently have improved the ADE features (e.g. more font size choices), and there are hacks to circumvent the CSS styles (similar to the Sony workarounds). But whether you're hacking the CSS styles or hacking the source to convert to another (better) format like FB2, the poor user still has to do some work to get a decent end product. This is really unacceptable.
So I buy Mobi, ePub, Lit, whatever, then use BookDesigner to convert to FB2 (OOoFBTools for OpenOffice also does good FB2 creation).