I found this on IPadForum, posted by IPad Master Bremen. It should work for Kindle as well. I haven't yet tried any of them as I have entirely too many books already on my Kindle!
Quote: I have posted a few of these in various places, but thought I would tie it together here. These are some sites that have FREE ebooks that are already in ePub format. They will import and read as is in iBooks.
ePub Books - MobileRead Forums
ManyBooks.net - Free eBooks for your iPad, smartphone, or eBook reader
epubBooks.com - Free EPUB eBooks for your mobile eReader - Unleash Your Books
Feedbooks | Food for the mind
The link below is a site that converts documents to ePub online.... Nothing to download....
2EPUB - Free tool to convert documents and e-books to EPUB format. 100% free online converter.