Winston,
You are both correct and incorrect at the same time.
You are correct insofar as iCloud doesn't sync across all devices, but errant in your assertions that iCloud doesn't sync the same content across all devices (sic). At least as far as what Apple claim it will do within iBooks.
This official iBooks link http://support.apple.com/kb/HT5544 clearly states "Books will be organized in the same collections on all of your devices. You can read and organize your books with your iPhone or iPod touch while you're on the go, and when you return home to your iPad, you'll find your books in the same organization you created on your iPhone or iPod touch. ". The article goes on to explain the additional options available for "purchased" books.
In the AppStore description of the iBooks app, under "iCloud features" it says "Organise your books and PDFs into personal collections that appear on all your devices" and "Keep your bookmarks, highlights, notes, and your current page up-to-date everywhere using iCloud". As these features are listed under the iCloud features section, it is fair to assumes iCloud manages and delivers them.
That seems fairly unequivocal to me.
Notwithstanding, I have the same issue as Shell44 above. I can create collections on both devices. The collection names synchronise between the devices, but not the content. The books and PDFs do not synchronise. I do not wish to use iTunes options that are available as this is not on-the-go cloud based syncing I need, so I am at a loss as to what to do.
I am using an iPhone 5 with an ipad mini and ipad 2. iBooks is version 3.1, iOS is 6.1.4 and 6.1.3 respectively. I have a paid storage subscription with apple for iCloud.
Any help greatly appreciated.