I use FrontPage for the initial draft effort. Basically, I generate a mini-web site using a TOC frame panel and Main frame panel. I can have multiple pages open on a tabbed layout. "ideas.htm" - inspirations outside of the book. "concepts.htm" for development thoughts. Plus pages being developed.
The TOC frame keeps track of my book structure and I can move topics around as the book develops.
Send out all review copies as RTF with review tracking turned on. Anything touched shows up.
I design the front cover in Word, adding text and graphics to a pre-sized single-row/column table - text boxes work great for this. Inserted graphics can be grayed or faded as needed. I save as PDF, and then open in Acrobat and save as JPG. This gives me a graphic of the entire front cover - an easy insertion into all ebook formats. (I stay away from embedded text in images.)
I use Acrobat for all final copies. PDF is becoming a common readable format across all eReaders. It's too bad that the current ebook outlets (Amazon, B&N, etc.) don't or won't sell PDF formatted books.
To create multiple formats, I use Calibre. To edit ePub, I use Sigil. Get MobiPocket to review files for formatting and layout.