Can I load and play audibooks on the iPod shuffle 2GB?
If so, how many standard novels can I fit on there, am I only allowed to download from the iTunes shop or can I also load from the library?
Yes you can load audiobooks onto the shuffle, The amount you load depends entirely on the size of the books. But to answer your question a 5 CD audio book uses about 120mb of data.
The formatted iPod Shuffle has in the region of 1966mb of free space. So using those numbers you will fit on average 16 full audiobooks on to the iPod Shuffle.
You can download audiobooks from anywhere iTunes, Audible or even Audio CD's you own, as they can be imported into iTunes.