I have a few knitting books. Stitch N Bitch, The Encyclopedia of Knitting, Knitting for Dummies, Teach Yourself Visually Knitting, and Cool Stuff: Teach Me to Knit (kids knitting book).
The one that I find the most useful is the Teach Yourself Visually Knitting one. The pictures are large and colorful and the directions are easy to follow. I used it the other day to learn how to do cables. I also got a lot out of the Cool Stuff book as it's geared to kids and was easy to use. It has several simple projects to work your way through to get your skills up.
I've been borrowing a bunch of knitting books from the library to try to figure out which ones are actually worth buying. (I think I've got over a dozen checked out at this very moment!) Right now I'm leaning toward the Knitter's Handbook by Montse Stanley as a general reference. Vogue Ultimate is also good, but I think the Stanley book is a little more thorough overall. I am also probably going to get Knitting from the Top by Barbara Walker, not because it's a good general reference (it's not), but because I like her approach to sweater construction. (Right now I'm working on a top-down seamless "set-in sleeve" sweater. Very cool.)
Oh yeah, and the other thing about the Knitter's Handbook is that it sells for about half the price of Vogue if you buy from amazon.com.
I also have Stitch 'n Bitch for reference. It was the text used at a "fix it" class I took at my LYS. I like the reference info in the first half of the book. The patterns in the second half of the book don't appeal to me at this point, but I know some people love them.