Just got an iPod touch for Christmas, and since I'm a fan of e-books I went right to the PDF reader, which basically means "Hit it with Safari." The first thing I discovered was that the PDF will in all likelihood enlarge itself to display in the window, whether you are holding the device normally or rotated 90 degrees. But what if the font is still not legible? The double tap to magnify trick does not work - it just wiggles a little and stays where it is.
But you know what works? The "two finger spread". Put two fingers on the screen, and pull them apart. The PDF will expand and zoom. Up to you to figure out the best size for reading.