Google has released an optimized version of Google Books for the iPhone. It sounds like quite a challenge. I tried it with Machiavelli's The Price and Sun Tzu's The Art of War (free only).
No luck. The search was surprisingly poor. Enter "The Prince" in Google and the first dozen or so hits are on the book, enter the same string in Book Search and you get an odd mix of texts.
Worse than the search, the OCR was pretty lousy, mostly because the underlying images were also lousy. Looks like the high speed scanner was having a bad day.
No threat to the Kindle here ...