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.
Earlier today I was purchasing a book called “The Alchemist” on Fictionwise using the Stanza application loaded on my iPod Touch. It was really frustrating because the process has way to many steps, is missing buttons, and does not make it easy to fill out the fields on the checkout forms. It is actually possible to complete the process though.