I came across a couple sites for free books today. One is for audio books, and one is children's books.
You can download free audio books from BooksShouldBeFree.com. There are quite a few books available in different genres. Most of them are older books, so you won't find any recent best-sellers, but definitely worth a look. There are quite a few books I've never read and might enjoy listening to, as well as some old favorites I haven't read in years. Books can be downloaded into iTunes or in MP3 format.
Free children's books can be downloaded at Children's Books Forever. There are some really cute books here. It looks like most, if not all, of them are written by Hans Wilhelm. The books open with Adobe Reader, so you can read them online, save them to your computer, print them out, and even use them on Smartboard, PowerPoint or overhead projectors (non-commercial use only) - so it looks like a great resource for parents and teachers.