Stanza is an ebook reader and library for your iPhone. It offers commercial titles, which can be bought through bookstores in the app, and free titles from providers like the Gutenberg project.
This is a really good application. It's well organized, easy to use and makes reading on the iPhone as comfortable as possible on such a small screen.
Downloading books couldn't be easier - you can search for titles directly, or browse the various libraries in Stanza, and then download what you want. Books are automatically added to your library, which can be viewed by Author, Title or Groups. Turn the iPhone around and you get an iTunes like 3D library to browse.
The important part, obviously is the reading itself, and Stanza performs excellently. There are lots of settings to play with, but in general, you can pinch the screen to increase and decrease font size and save the setting you like, and sliding a finger up and down the page controls the brightness.
There is also a generous collection of themes for reading, so you can find a set up you're most comfortable with. Turning pages and navigating around books is also really easy and most importantly - fast.
Reading on an iPhone was never going to be perfect, but Stanza does about the best job imaginable.