I use the iBooks app for reading PDF files. I works pretty well, although you do have to zoom in pan around to read it, depending on how the page was formatted. The limitation is the small screen and making the text big enough to read. You add PDFs through iTunes, and they appear as a "collection" on your shelf in iBooks. One collection for books, and one for PDF.
The .epub books are better for the small screen because the text flows to fit the screen. Also you can change the text size. So epub works more like a web page, where the column size changes to adapt when you resize a browser window.
I have the Kindle app too, which I just use for ebooks that I buy on Amazon. The others go into iBooks.