I'm nowhere near ready to call myself an expert on this subject, nor all the tools and services involved. The first blog I ran across that shines a lot of light on both the craft and the technology is Self-Publishing Adventure (author is "Sarah"). I highly recommend her blog to anyone thinking about getting into this as a hobby or as a serious investment of time and love.
As for tools: I've played with a few, and found some that I like and some I do not. On the "do not" side is Adobe InDesign. It's probably a very capable product, but I have two problems with it:
1. It's overkill for writing basic e-book content
2. It's very expensive
It does purport to convert (export) content to EPUB format however. As for those I like (so far): Calibre, and MobiPocket Creator. Calibre is capable of converting to multiple formats, especially EPUB (Nook, Sony Reader, Google Books), while MobiPocket Creator is aimed at PRC/MOBI formats (Amazon Kindle and a few others). Also, the web site http://www.2epub.com has a pretty interesting and fairly decent online conversion service. If your source content is very clean and ship-shape, it can convert it very well. Mine is not. Then again, I'm using Microsoft Word, which seems to be hated by book publishing professionals.