I never got very far, but, happily, the University of North Carolina went all the way (their reading center also sponsors the summer literacy program at Camp Courage Minnesota our son recently completed). I've read a few of these online picture books and they're really quite good.We'll see how well they work with our struggling reader.
Tar Heel Reader... Welcome to the Tar Heel Reader, a collection of free, easy-to-read, and accessible books on a wide range of topics. Each book can be speech enabled and accessed using multiple interfaces (i.e. switches, alternative keyboards, touch screens, and dedicated AAC devices). The books may be downloaded as slide shows in PowerPoint, Impress, or Flash format.
You may write your own books using pictures from the huge collection at Flickr or pictures you upload....
... We have books that are intended for teenagers who are just learning to read. You may find some books that are inappropriate for your students; don’t use those. We recommend you learn about the Favorites page as a way to present your students with reading choices that you approve....... This site is a result of a collaboration between Center for Literacy and Disability Studies and the department of Computer Science at the University of North Carolina at Chapel Hill.
I've asked them if they'll look into a version of the site optimized for an iPhone/iTouch.
Update: they have a blog, but as of 7/3/09 the feed doesn't work quite the way one would expect. Try this URL instead: http://tarheelreader.org/
category/announcements/feed/. It worked for me.