It took me several days to figure out just the right combination of ebook reading software on my iPhone. It seems that at the moment no app of this kind can perform all functions that I find absolutely necessary. Namely, I want to be able to read fb2 books and they must be very well organized on the device with multiple nesting folders. GoodReader (presently $1 at the app store) works very well with folders and handles PDFs using reflow technology. However, this reader does not support fb2 format. I also don't like the fact that when GoodReader opens zip files the resulting files are not stored in a temp folder, but instead show up in the same folder as the archive. UBooks is a free app that reads fb2, but it does not support nesting folders. But a very nice feature of this reader is the fact that it stores files in a folder seen by iPhone Explorer, which makes uploading files very easy. So, my combined solution right now is to load my digital library in zipped txt format into GoodReader using WiFi (works quite well, although a bit slow) and use UBooks for any additional books in fb2 format. And, of course, there is a Kindle app for newly purchased books.
There is also an app called ShortBook ($5) which looks very promising. It looks like it relies on internal info in fb2 files for its database, so the resulting list is quite manageable. But I don't like the way book pages are presented and the interface is a bit convoluted. I was going to give this app a try, but its free version kept crashing every time I attempted to change the font from the default Arial to Verdana. I guess I will wait until buying it.