I use a Sandisk Ultra II 4GB CF card in my iLiad and it works fine. I don't have a card reader - the CF stays in my iLiad all the time.
I had a problem with my CF card being unreliable at first, but then I realised I hadn't pushed it down firmly into its slot on the iLiad. Once this was done, I've had no problems with it.
I don't use my CF card for wireless PC to iLiad transfers as I found it was very slow (this is a known problem with CF cards and iLiads). Via USB connection to my PC, it works perfectly.
I didn't need to format the card - it worked straight after being in a camera - I just deleted the photos.
I hope you're able to solve the problem - CF cards are a very convenient, easy way to store a lot of books.
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