ResourceShelf has a detailed discussion, with some comparison to Google Book Search. The Google book search has developed considerably since we looked at it a few months ago; and as of this fall also began allowing full view of out-of-copyright works, and PDF downloads in some but not all cases. If it's got a PDF button you can download it, though it's not at all clear why, though the book is out of copyright and you are able to read or print every page, some still don't allow download.
Resource Shelf earlier pointed to a New York Times article about Google's book search and copyright woes. In anticipation of the Live launch, Forbes put together a special report on books with short articles on books, publishing, and their mutual future; and with a sidebar in which a number of writers finish the two sentences, 'To me books are...', and 'The last significant thing I read was...' Brewster Kahle of the Internet Archive, who whose Open Content Alliance is another digitization project, was recently interviewed about Google's book scanning, and that video is kicking around the web.
The longer-established sites with full text books are still growing; unlike the big scanning projects they are mostly text-only. Better, in fact, for searching, as the texts tend to have been carefully coded and human-checked. Carnegie Library of Philadelphia has a nice list of sites. Slippery Rock University also has a seductive list of sites.