Just a few bits from my experience (not just limited to BDSM Library): the less formatting you apply, the better. Don't even try to set margins or trifle with line and paragraph spacing, as what may look good on your screen is likely to be completely different on the readers'. Let paragraphs wrap themselves, don't insert any hard line breaks, and simply make double line breaks between paragraphs (or, in case of HTML, simply wrapping your paragraphs in 'p' tags is sufficient). This way, it won't matter if the reader has a 24" or more wide screen with 1900 pixels or if he's reading it on a 320 pixels PDA. Like lucy said, if you even set a font at all, keep to the few standard fonts that are common on all the different operating systems.
If you really feel that a story needs special formatting, you might give the reader the choice and submit a standard, 'dumb' version in TXT, HTML or RTF format together with a 'fancy' one in PDF format (you can use Openoffice to create that).