Project Gutenberg (www.gutenberg.org) is great for free books for which copyright has expired (in the US anyway).
Most of the CDs with thousands of books are downloads from gutenberg, sold on to people who don't know you can get them for free as well. All the free books you get so kindly with your iPad are also from there.
I'm living in Austria. I have a kindle (which I think DH got from the amazon.de but it doesn't care which site you use). I buy books and ebooks on amazon.co.uk, amazon.de and sometimes amazon.com. I keep a beady eye on www.ereaderiq.co.uk/free/ where you can track for cut-price or free kindle books! I'm on library thing www.librarything.com too- it's primarily a catalogueing site but there is a great talk area where I hear about free ebooks and they also have monthly e-book giveaways for reviews. Through that I've used smashwords and other sites that host ebooks.
I dont live in the Uk anymore , Belgium so they have now directed me to the .com site or .fr. But i now find myself not buying anything on them. com are so expensive sometimes a few dollars more than the paperback. There is no daily delas and no special offers. I noticed also that .co.uk books are now a bit pricy too. I know this is a result of all the people that now own Kindles. Does any of you know of a way to download books of a site ? Also i saw some sellers on Ebay selling cd's with thousands of books on them and you can then upload from youre computer to your kindle. any ideas.