While looking for an ebook for my reader i stumbled across my local library website in hertfordshire.
They have a lot (405) ebooks in either the .epub or .mobi format. I don't know of any readers that support both formats so you might need to look around.
The .epub seems to becoming more popular and requires Adobe Digital Editions to be installed on your PC to allow the DRM to work. You can borrow 3 books for 3 weeks at a time though you can't check them back in early if you finish them.
Have a look here to see which book readers are supportedhttp://www.adobe.com/products/digitaleditions/devices/
There are a lot of newer books available including
Andy Murray Bio
Dan Brown - Lost Symbol
James Patterson - I, Alex Cross
James Patterson - 8th Confession
Andy McNab - Brute Force
Kathy Reichs - 206 Bones
I believe other libraries might support this including
Essex, Luton and Windsor & Maidenhead
The following should be online now or soon
Hampshire, Liverpool and Norfolk
Hope this helps someone. It certainly has helped me.