You probably saw in the news that the Authors Guild has taken Google to court for copyright violation built into their scanning project as planned. Peter Suber has an extensive and detailed discussion with links in the SPARC Open Access Newletter. (SPARC? Scholarly Publishing and Academic Resources Coalition.) This is an extremely entangled issue, and of course Suber has his own slant (Open Access), but his links lead you to all opinions, documents, and background information.
Meanwhile, and quite suddenly, as of Tuesday Yahoo moved into the realm of scanning books. Here are news stories from the Globe and Mail, Infotoday, The Register ("Yahoo! follows Google into print minefield").
When the library first got online, about 12 years ago, library users innocently imagined that if they could see a book listed at Library of Congress, or elsewhere, it meant that the Whole Book Was Available online. Right then, and maybe for free. So now it's twelve years on, and it looks like the technology world is about to catch up with our imaginings as soon as some of the more explosive complications are ironed out.
Perhaps this is a good moment to point to one of the earliest imaginers, Vannevar Bush, whose essay "As We May Think" in the July 1945 Atlantic Monthly first floated the idea of machines making all the contents of libraries accessible. Wikipedia on Vannevar Bush's "memex" ("memory extender"): "[Vannevar] Bush described the device as electronically linked to a library and able to display books and films from the library and automatically follow cross-references from one work to another. This idea directly influenced computer pioneer Douglas Engelbart, and also led to Ted Nelson's groundbreaking work in concepts of hypermedia and hypertext."