I am a HUGE fan of audiobooks, as one might guess, since I'm such an iPod lover! First of all, audiobooks fit nicely into my life--just as with podcasts, I can listen to an audiobook during my commute time, while waiting in a traffic jam or wherever! My family enjoys audiobooks together just about every time we take a trip. I "read" books in this way that I might not have time to read otherwise.
As an educator, I find audiobooks to be a wonderfully accessible format for students. Readers who might not be able to "handle" a book that their peers are reading can listen along--or better yet, listen while reading--to an audiobook, thereby "keeping up" with their friends. In fact, when the Harry Potter series was first published, this is how my 3rd grader, who was not then a strong reader and would never have been able to read them alone, read the first couple of books. By the time the third one was published, she was reading while listening. That particular audio series was such a phenomenal production that by the publication of the 7th book, our whole family chose to read and listen to the book. The audiobooks had taken on a life of their own, and we didn't want to miss Jim Dale's performance any more than we wanted to miss reading the books ourselves!
Podiobooks, Librivox and Audiobooks with Annie are all great sources for free audiobooks--both new titles by new authors and titles in the public domain through the Gutenberg Project.
eBooks I am not as familiar or comfortable with. Possibly because I don't have a portable device that I can read them on. While I don't mind surfing the web on my laptop, I don't love to spend a huge amount of time reading on it. Also, it seems to be harder on my old eyes than a traditional book. I just don't like it.
That being stated though, I do understand that our students are more comfortable with the format, and I see that I need to explore and think more about such sites as Overdrive and the World eBook Fair.