The process of creating an iBook is surprisingly straightforward. Creators can type their text directly into iBook Author, but Rosner noted that some people prefer doing their writing in a different environment like Microsoft Word. iBook Author plays nice with those Word documents, as it automatically picks out and creates sections and headers from the text itself when the document is dragged into a new iBook chapter. Adding images is just as simple, as users can drag them onto a page while the text reformats itself around whatever you add.TechCrunch has the story and relevant links.
Postscript: Gizmodo has a video entitled "How to Make an iPad Textbook in Under Five Minutes".