You have a couple options with reading CHM files (a type of eBook) on your Touch or your iPhone. The two I explored were converting the files or using an application from the app store on iTunes called iCHM.
There are a ton of shareware applications that will allow you to convert image files to PDF for free however they typically leave text about their product all over the PDF until you pay for the application. I was able to locate and successfully convert some jpeg files using a freeware application from CNET download center. It is very easy to use however you have to make sure your images are a certain size before converting or it will not work properly. Below are step by step instructions on how to convert multiple image files into one multi page PDF document. Make sure that each of your image files is 600×800 pixels in size or smaller if you want the entire image to fit onto the PDF page. You can also adjust the “Page Size” setting if you prefer to have larger than normal PDF pages.