Reading PDF documents on the iPad is in my opinion quite pleasant. That being said, it is never optimal to view A4-sized static documents on a (close to) A5-sized screen. For shorter documents, PDF is fine, but a true e-book should of course be unaffected by the shape of the device you want to read it on!
There are a lot of more flexible e-book standards, but there is only on free and open standard that is significant in the future of e-books: the EPUB format. According to wikipedia "EPUB is designed for reflowable content, meaning that the text display can be optimized for the particular display device used by the reader of the EPUB-formatted book." The combination of flexibility and openness is a key issue for the viability of the epub format (and did I mention it is also supported on the iPad?).
Since it is an open standard, there are no principle problems for creating your own e-book in EPUB format. On the other hand, it is still a very young and evolving format and unfortunately none of the major text-editors have a .epub export option at this moment. After playing around a bit with a number of options, I here present my (at this moment) preferred way of making an e-book out of a rather large Word .docx document (it concerned a booklet our faculty distributes, explaining safety rules and all that). Once you know how, it is rather easy, actually.
1) Start with a .docx document. Older .doc files should also work, but .docx seems to work better.
2) Make sure that the formatting of the document is clean and EPUB-friendly.
- Use headings consistently throughout the document (important for the Table of Contents).
- Use a consistent style throughout the document.
- Avoid tables or other complicated formatting; EPUB is not your friend in this area. Transform tables into more simple lists.
3) Save the documents as a web page. On a Mac, check the option 'save only display information in HTML'. On Windows use 'Save as Web Page, Filtered'. This makes the html code a lot cleaner and easier to work with in the next step.
4) Download and install the Sigil program (open source/multi-platform!).
5) Simple open the html file saved from Word and let Sigil convert it. You can then save the file as a .epub document and your e-book is ready!
Now the .epub file is ready, there are still some improvements that can be made:
6) Set the Meta Data. Via Tools --> Meta Editor, you can specify the name of the author, etc.
7) Sigil comes with a 'Table of Contents' editor (Tools --> TOC Editor), where you can see the chapter headers that were important from the html document. There you can deselect headers that you might not want to show up in the actual e-book. It is also possible to see which chapter headers are missing, which can be fixed by going to the appropriate part of the .epub and changing the header. Actually, missing headers means that your original Word document wasn't correctly formatted!
8) Add breaks in the .epub file. As you import the html file, Sigil creates one large document which can take a while to load on the e-reader. By setting your cursor at the appropriate places (just before chapter headings) and hitting the 'Chapter Break' button (top right in the toolbar section), Sigil splits your document into smaller pieces. The reading experience becomes much more pleasant with this small effort.
After this, you will hopefully have a perfectly usable .epub document that you can use in any way you like!
For more information and examples on e-book creation with Sigil, visit this page.