Audiobooks & eBooks are a big part of the iPad. Here are some links to help you get started...
Overdrive - Check out books from the Library
Project Gutenberg (loads as an audio file in your music app)
Educational Technology Clearinghouse
Simply Audiobooks
Get Freee Books
Books Should Be Free
Free Classic Audiobooks
Learn Out Loud
Unlimited eBooks

From the iTunes iBook Store:
Just about any Classical Book is available for free
CK 12 Science & Math Textbooks
iPad User Guide - as well as other iPad How To Books

Apps from iTunes That Are Books / Series:
Milly & Molly (series)
Dr. Seuss Books
Our Choice by Al Gore ($5) Includes Video
SiB RaJ Lite (Shakespere in Bits - Choose your Story) Includes video
USA Today
Time Magazine
National Geographic Magazine
Free Books / Free Books EDU
Miss Spider
Magic School Bus
iStory Books
Velveteen Rabbit