HTML view (plain text) should follow naturally for public domain books, as the downloaded PDF contains only the scanned pages, without OCR. Google should also improve the way books are read online, by optimizing page view for any resolution. The download option for public domain books will be followed shortly by an easier way to buy books directly from Google.
Project Gutenberg offers 19,000 free ebooks, but their content is not searchable online. The books can be downloaded as text files.
Related:
Google's Digital Library of Alexandria