My favourite book in Oblivion was the Marksman skill book "Vernaccus and Bourlor." It was a great story about a man who would never miss a shot with his bow. One day he was called to take care of a daedra and his arrow missed as the daedra vanished. The man never shot a bow again and died soon after. Years later the daedra was killed in one of his shrines because the door was built from the tree that the stray arrow hit all those years ago and it didn't close and allowed him to be stoned. The man's reputation for never missing then lived on despite it not being remembered.
Also, the new inventory system makes it sound like you read books and notes in the 3D view. Does anyone have any more info on this topic?