Most of mine come from Audible.com; best prices if you use it regularly. Itunes carries many audiobooks as well, and aren't that much more expensive than audible. For infrequent users I would choose iTunes.
If you are into fantasy, one of the best series out there is Robert Jordan's Wheel of Time series. It's in the same vein of Lord of the Rings, and while I will always have a fond place in my heart for the LOTR audiobooks, I find the Wheel of Time more engaging, compelling, hugely epic, and quite original. Plus, it's a 12-book series. There are literally 14.5 days worth of listening (that's 24 hours/day!). You could literally spend your entire PCT thru-hike listening to these.
Second source is from libraries; some have great selections, and some are online.
Third source is from the Teaching Company. These are usually excellent college-level courses by award-winning teachers. They recently added an online download feature, and the files cheaper than the disks and are DRM free! If you watch for the frequent 70% off discounts, you can get $200 titles for as low as $35 with the download option.
My favorite titles so far have been the music appreciation courses by Robert Greenberg, the Global Warming course (which was an excellent scientific discourse on the subject without politics getting in the way), and the origins of life series. Some of the History ones are really good, too. I've learned far more from Teaching Company lectures than from my college elective courses.
I think backpacking is one of the great places to listen to audiobooks. I spend most of my time just zoning out, reflecting, or listening to nature, but I find there are certain times when audiobooks are excellent on backpacking trips. You can start them on the sometimes long road trip to the trailhead, and they really help the time pass in long stretches of switchbacks or hours of unbroken forest. I also find them the best way to pass time at night when I can't fall asleep; I don't wear out my flashlight batteries and I can lie down while listening (instead of propped up awkwardly with a book). Also, for long in-and-out hikes, where the return feels much longer, that's a great time for them.
Oh, and an iPod Nano or Shuffle is probably more water-resistant than a paperback book. But since I carry my iPhone with me anyway, I just use that. Can't wait until 3r party developers start creating topo GPS apps for the iPhone (developers' SDK comes out tomorrow).