I haven't been one to use/read ebooks myself in the past, although I've been wanting to, and now I have an even better reason to do so with the portability provided by the 770.
I'm sure those who've been doing it longer can provide much better links, but this will get you started for now.
Formats - I'd say anything specific to the reader will be optimal as your navigation, bookmarking/tagging of segments will be more intuitive and feature-filled. One can still open HTML (.htm, .html) and plain text (.txt) electronic documents and view them in the 770 web browser.
Readers - From perusing the forums here many *seem* to prefer FBreader, others may use Plucker. I have not yet needed a dedicated reader yet but installed FBreader just last night to see how it works.
Sites - I've avoided pay sites, heck I think some can be purchased even through Amazon. Here are a couple of links to freebies, one I'd found a long time ago, another just last night.
I'm sure the diehard fans will be able to provide you more choices. I pulled up an HTML book last night and read into the wee hours. I hadn't read any fiction, apart from about 2 chapters of LOTR a few years ago, in about 15 years! What a joy to simply be entertained for once.