I get most of my free ebooks directly from amazon. I check the Bestseller Lists (one for paid and one for free) regularly. Usually "purchasing" one freebie leads to another.
I also use mobipocket to convert PDFs to Kindle-readable files. (yes, the newer ones read pdfs as a native format, but the display is cludgy on the k3, and I find i easier to convert. If there are formatting issues, I'll read on the KDX which displays pdfs at a readable size.
I hear there are some pirate ebook sites around, kind of like what napster was in the old days ... not that I'd suggest that people should read really bad scans of Harry Potter or anything like that.
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