The best feature of the iPod’s audiobook format is the ability to resume playback at a particular point even if you play something else or turn the iPod off. There are many online services where you can obtain audiobooks, but most of them are in MP3, which the iPod just treats as regular music. With a few steps, it is easy to convert MP3 files (or any other filetype that iTunes can play) into the native iPod audiobook format. There are a lot of different methods out there, but this seems to be the easiest:

I have iTunes 8.x .

First, drag the file into your itunes library.
Second, find it (probably in music)
Third, right click the “song.”

Get info >Options > (where it says “Media kind: Music”
change the “music” to audiobook in the dropdown list.)

Click ok and it should be moved to “audiobooks” under “library”

Tada!