One of my favorite sources of eBooks is available through our public library. Tumblebooks are children's books that are read to you/your child. This is one of my son's favorite things to do on the web and is often part of our bedtime routine. They're set up so that they read the book for you, but you can also use them to develop your reading skills by reading them yourself--we're not to that point yet, so I don't have much experience there, but I know that we've read many books that we might not have found on the shelves of our library because of our access to Tumblebooks. One of my favorite authors, Robert Munsch has several books there and AJ has loved reading all sorts of different books on this site.
Project Gutenberg is probably the most famous of free online eBook providers, but I didn't realize just how many free eBook providers there were--World eBook Fair has links to sites in all sorts of content areas and includes numerous government documents. Due to our district's participation in AccessPA, we've got access to over 3000 free eBooks through NetLibrary and also to those our local public library has purchased for their patrons. The most aggravating thing about NetLibrary is books are opened one page at a time and it's very time consuming to "read" an eBook. It would be useful though for research and books can be searched for specific content.
Audio eBooks are available for purchase through several sources. We've had a subscription to Audible off and on over the past 5 years and this is definitely my husbands preferred way to read. My public library also provides access to recorded books, although we were disappointed to find that iPods are not compatible with their provider, OverDrive because of DRM (digital rights management) issues. Had we known that audiobooks were available through the public library before we bought our iPods, we might have made a different choice.