Books on the Knob, Pixel of Ink, and iReader Review are three blogs that feature free & bargain ebooks daily. If you want to start simple there’s OpenCulture’s 375 Free eBooks list but if you don’t mind doing some footwork then there’s this very comprehensive 614 Places for Free eBooks Online post (with divisions of content by genre) on Gizmo’s Freeware.
more sites featuring free & cheap ebooks:
*and of course there’s always the Baen Free Library
Not to mention the granddaddy of them all, easy to ignore because it’s been around so long: Gutenberg
For those with iDevices, there’s always the Free Books app