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I was curious about this, too, so a few weeks ago I checked it out on my Kindle 3. When deleting the book, the associated index file was also deleted. I verified this by looking at the index folder before and after the book deletion. No reboot was required.
Note that I only tried this using the file-deletion function on the Kindle itself, since that's the way I delete books after I finish reading them. If one were to delete a book using calibre or your operating system's file manager (Windows Explorer, for instance), then I don't know what the results would be. Probably someone here does, though. If not, I could check it out easily enough, if that's important to you.
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