Some interesting discussions/information about converting PDF to ePub files on the Apple Support Discussion forum. Particularly interesting is the comment about Calibre and Stanza:
Both Calibre and Stanza will convert Pages PDF files to ePUB. However, as you noted, your results may not be what you expect. Using these applications it is better to create a very simple PDF source file for conversion. While Calibre retains your images while Stanza drops the completely (except possible for the first one which it may interpret as a a book cover) and neither application will retain things like "shapes" used as sub-chapter dividers, text boxes/background colors, paragraph borders/rules, etc. If drop shadows are used, Calibre will simply render them as black rectangles.
Both applications may do strange things with text depending on whether you use blank lines to separate paragraphs and or want paragraph indents, justified text, and such. Stanza also annoys me because it adds any header to the last paragraph of text on each page which adds an extra carriage return and divides the paragraph into two parts. For these and other reasons, I have switched to custom Pages PDF files targeted at 800x600 displays at 180 DPI. This allows me to create a single file for use on both my Amazon Kindle 2 (800x600 @166 DPI) and a Sony Pocketbook Edition (800x600 @ 200 DPI). Since I only create files for my own use or reading to the grandchildren (i.e., what I call "personal publishing"), this "non-print" work flow serves my purpose but may not be suitable for you.
John Gruber, of Daring Fireball blog posted a long series of thoughts about the iPad.
From Amazon's press release: Amazon.com Announces Fourth Quarter Sales up 42% to $9.5 Billion
"Millions of people now own Kindles," said Jeff Bezos, founder and CEO of Amazon.com. "And Kindle owners read, a lot. When we have both editions, we sell 6 Kindle books for every 10 physical books. This is year-to-date and includes only paid books -- free Kindle books would make the number even higher. It's been an exciting 27 months."