From Neatorama comes a sub-blog called Bit Lit, in which they'll "be serializing entire novels and short stories—even some poetry, many published by major publishers like Random House. Every day, a new chapter until the entire story is complete.
"Plus, [they]’ll be interviewing authors and having contests to give away free, autographed copies of their books."
For teachers looking for alternative sources of free reading material, this could be very valuable.
Speaking of free reading material, I do not vouch for the legality or the permanence of this site, but it contains virtually all of the work of F. Scott Fitgerald, including that certain novel about that very rich person which many of us teach. It is Russian based, so it has all the texts in English and Russian, just in case you have an ESL student from Russia!