As many of you have already noticed, iPhone doesn't have an eBook reader, which is quite necessary and usefull for some people. To make things right, a third party group of programmers have released an unauthorized iPhone application for reading eBooks.
It supports text and HTML files stored in your Media / EBooks folder, and can enter subdirectories. More advanced versions are still to follow.
The application can be downloaded from here. But remember, this is an unofficial application, so use it on your own risk.