I just saw Book Army
mentioned on BoingBoing - it claims to be a recommendation engine that suggests books based on your tastes (gleaned from the libraries of others). I haven't tried it, but it sounds promising.
When I'm looking for something new to read, I generally go to Amazon and look for authors that I like that I've already read, and then look for what other people bought who also bought that author. I've found some great books that way - for instance, I searched for Neal Stephenson and followed that to Neil Gaiman's Neverwhere. I'd never heard of him before (I know, I know) but I took a chance and really liked it.