I just got my iPad 3G on Monday. It’s fun. The built-in iBooks store has free books. But you can also just download any ePub format book, say from Project Gutenberg or epubbooks.com, and then drag and drop the file onto iTunes.
The Amazon Kindle app also works just fine, and it is easier to find free books via Kindle ebooks store. THe downloaded books will sync to all Kindle devices and apps (including iPad and desktop computer).