For beginners and other types who've never read much about knitting:
"Knitting Rules!" by the Yarn Harlot, also known as Stephanie Pearl-McPhee. I've got a copy, and read through it thinking 'damn, I wish I'd had this book when I first learned to knit'. Mostly it contains basic stuff, but you never know when you're going to need basic stuff - I recently used her generic sock pattern with commentary to decode what I was doing with the stripey socks. (They didn't fit, but that wasn't her fault.) She's also got cool stuff like how to identify what fiber yarn is spun from, and of course the whole thing is entertaining as all get-out to read.
"Meg Swanen's Knitting". This one contains a lot of finishing detail. Applied I-cord, different button-holes, grafting, crocheted steeks, you name it. In terms of technique, I'd say the Schoolhouse Press group, led by Meg Swansen, is putting out some of the most original stuff available. The sweaters are reallly nice too, and encourage you to think and do your own math, not just brainlessly follow a pattern. (Must. Knit. Russian. Prime.)
For when you're on the fine line between following patterns and designing your own:
"Designing Knitwear" by Deborah Newton. This contains a lot of useful stuff about how sweaters are constructed and how certain things should look (cap sleeves, lapels, etc), so even if you never design your own knitwear, it's still darn useful. If you DO design your own knitwear, it's invaluable.
"The Knitter's Handy Book of Patterns" by Ann Budd. She deserves a medal for this. Generic patterns for every size everything; in different gauges. Buy this book and you'll never need another pattern book. Contains sweaters, cardigans, hats, scarves, gloves, mittens, and socks. Wonder how big a men's triple-extra-large really is? Buy this and you can look it up.
In the 'Inspiration' category:
"Unexpected Knitting" by Debbie New. This woman does things with knitting that you never imagined. Even if you never try any of it (you should), it still makes you want to run out and cast on something, anything. (Must. Knit. Teacups.)
"Mason*Dixon Knitting" by Kay Gardner and Ann Shayne. There are some really nice patterns in here, but most of all, this book will make you laugh - a lot - and walk away grinning, saying "yeah, I love knitting too".
I'm sure I'll come up with more tomorrow, but there you go, some books for the Christmas list.