Project Gutenberg offers thousands of titles (mostly fiction) in txt format, while manybooks.net provides an impressive array of books in Sony format (as well as several other formats).
The motherload of free ebooks, however, is books.google.com. The Google folks are busy digitizing every book they can get their hands on. As of this writing, they have reportedly digitized over 10,000 public domain books, which anyone can download for free in pdf format.
But there is something screwy about the Google pdf files. Sony Reader (PRS-500 model, purchased in December 2006) cannot read Google pdfs, and I understand that later models have the same problem.
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