I disagree. I was pretty impressed at how readable it was on the iPhone. The biggest problem with copyright free e-books is that they are 100 years old, and mostly boring. Not all, but most.
Wow, you need to find the right 100-year-old books. Literature was if anything better then than it is now.
On the iPhone you get blurbs. I have the same problem with Classics on the iPhone. It makes reading feel cramped. Stanza is even worse: it has awful margins, and it has no support for making paragraphs feel good. It's functional but unpleasant.
I guess we can disagree on the quality of old books. There are a lot of great classics. Don't get me wrong. I wouldn't argue that only new books are worth reading, but if there are 500,000 100+ year old books available, I would still argue that 499,100 wouldn't be interesting to almost anyone outside of maybe research purposes. But hey, that's 100 free interesting books, right?