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iBooks is the new app that makes the iPad into a full e-reader. Make sure you download it for free from the App Store. iBooks supports the ePub file format. Download apps from the iBookstore or sync them with iTunes. Ars Techica wrote on their web site that iBooks ePub uses the Fairplay DRM so copying them won't be possible to a non-Apple device. Google Book's free ePub books can be synced. Non-DRM ePub books can be synced through iTunes.

If you have a PDF that you want in there, convert it using the free Calibre software then sync through iTunes to iBooks. Calibre supports Macintosh, Windows, and LInux.

Source: http://www.apple.com/ipad/features/ibooks.html
http://calibre-ebook.com/

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