OS X 10.9 (Mavericks) added an iBooks app that replaces the e-book functionality of iTunes. It is no longer obvious how you add an e-book to your iTunes library so it will be synced on your Mac.
Drag .ePub e-book onto the iBook icon, hit the menu command, then sync my phone via USB, and my books are where they are supposed to be.
iBooks in iOS 7.0.4 has a bug: Do a search that returns about 8 books. Note that there's no scroll bar in the result list, even while scrolling, and that the keyboard covers the bottom result, and you can't scroll those results into visibility. Sloppy of them.