For those still looking into ebook options for the iPhone,
manybooks.net has a nice breakdown. If you do not want to jailbreak your phone, you can download books as "bookmarklets" from some sites, including manybooks. Also, with the coming 2.0 firmware (supposed to be available in July), there is hope of ebook apps that will not require jailbreaking -- I know eReader has stated that they are working on porting their reader. I expect there will be others as well.
Jack