Since this topic got bumped, I thought of another book. There have been quite a number of suggestions that are magic-related - Strong, ME, 5 Points, etc., which are all fantastic, but I wanted to add something absolutely non-magically related at all:
The Empty Space, by Peter Brook.
Absolutely brilliant. Based on a series of lectures some decades ago (1968 if memory serves) about the state of theatre, its aims, pitfalls, and potential. It's a real eye-opener about bad theatre, and hence, bad magic, as well as the wonderful things magic can achieve. It also has many lessons that can be applied to performing magic and the general creative process.
A warning: The book is written in sophisticated English. If you read this, make sure you've gotten a lot of sleep the night before, and you're ready to read, re-read, and think. Probably not for those completely unaccustomed to theatre either - theatrical knowledge is ideal - Stanislavski, Artaud, Grotowski, Brecht - the main guys - etc.
Despite this, this is one of those books, that everyone should read, but that magicians, actors, and anyone who has anything to do with performance must read.