I use Calibre to convert my books.
calibre - E-book management
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"Calibre supports the conversion of many input formats to many output formats. It can convert every input format in the following list, to every output format.
Input Formats: CBZ, CBR, CBC, CHM, EPUB, FB2, HTML, LIT, LRF, MOBI, ODT, PDF, PRC**, PDB, PML, RB, RTF, SNB, TCR, TXT
Output Formats: EPUB, FB2, OEB, LIT, LRF, MOBI, PDB, PML, RB, PDF, SNB, TCR, TXT"
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It handles your .LIT format. I personally convert everything to Epub format.
Everyone is different but I have been using Moon+ Reader+ for reading.
Moon+ Reader for Android - Your finger reader for best experience in Android
I used and recommended Aikido and iReader but I found this one to be better. There may be even better readers but so far Moon+ is the best I have found out of all the ones I tried. I am sure I may find another, better one in the future but this is the one for now.
It is very customizable and has the cool page turn effect etc... The Pro version has TTS.
If you are interested you can get it from appbrain here:
Download Moon+ Reader for your Android phone on AppBrain
Hope this helps.