iPhone 3GS is a great gadget and I have only just started to explore its features fully. I realised pretty early on that there is no direct way to use iPhone as a storage medium with easy access to files. Files Lite is a great free app which allows you to use your iPhone as a storage medium. It works like this on a wireless network with a PC loaded with Windows 7.
1. Download the app Files Lite from the App Store and start it. It will give a server address. Note it down.
2. Go to your PC or Mac and set up a network drive. In case of a PC with Windows 7 RC go to Libraries and right click on Network and go to Map Network Drive.
3. Choose a drive (for example X:) and enter folder name as the server address given by Files Lite, which might look like this http://192.168.0.x:8080.
4. You will see the folder Public under DavWWWRoot (\\192.168.0.X:8080) X: on your PC when you go into Libraries. Transfer the files you would like to store on your iPhone to the folder Public. You may create sub-folders as well.
Files Lite has a limitation of 200 MB storage capacity. For unlimited storage capacity (only limited by the iPhone storage capaciy) one may get a paid app named Files for £2.99.
I usually like to transfer e-books in pdf format onto my iPhone for leisurely reading.