If I had to choose just one book to give to any web designer, it'd be Steve Krug's Don't Make Me Think. Although some of his arguments may seem obvious, every time I pick the book up for a refresher I find that I am making the same mistakes in my interfaces. Krug thoroughly lays out the unique usability challenges of designing for the web.
edit: If you're looking for a book that will take your designing to another level, don't. The best way to improve is opening up Photoshop and getting to work. Not just websites, but business cards, logos, posters, packaging... do it all and soak it up. I can't stress enough how important it is to get exposed to a variety of styles and forms of design.
If you want reading material, I recommend these blogs and websites: