I have iBooks to read iTunes books. Most of the time I use Stanza to read epubs and Kindle to read mobi books. For reading txt books, try Share Reader HD (got it when it was free and it can be used to read html, pdf, epub, doc, txt). For html books, try USB Sharp Pro (also has music player that supports lyric search). Kobo, Ouiivo (for epubs) and DocStorm (pdf) are also alright.
I like to have a few readers in my iPad (in case any don't work after an iOS or app update, I can still use another).
P/s BTW, my device is not jailbroken too. Plenty of free apps giveaways if you watch out for it, so there's no need to jailbreak. Stanza and Kindle is free and the best alternative to iBooks. (Kobo & Ouiivo is also free, but I removed them because there's nothing special about the apps).
Edit : March 22, 2013
There's a free app for iPad (Documents by Readdle) with Dropbox, Box.net and Google Drive support. The app also allows you to set password (your 'sensitive' docs/ebooks/music-room-tell-us-what-you-listen-too-15700/pics are for your eyes only) which iBooks doesn't have. I'm using this more as a pdf reader because it 'remembers' (auto-bookmark?) the page you stop reading. It also allows viewing of countless other files, including office documents. A must-have on your iPad.