I never heard of Youkoso. Is it just for beginners? I'll look out for it...
Actually, the fact that I'd never heard of the book that Samuraitora suggested shows how difficult it would be for me to include all the titles that people would want to vote for in a poll, so I'll just give a few recommendations of my own and hope other people do the same:
good buys:
1." Kodansha's Compact Kanji Guide";
2. "250 Kanji for Everyday Use": great for people living in Japan, teaches you the kanji you see in stations, in the bank and on your gas bill etc., rather than starting with a Japanese first-grade 'tree' 'stone..'
3."Essential Japanese" by Samul E. Martin: very out of date, written when the only foreigners in Japan were GIs or missionaries, this shows in the example sentences. However, it offers an accurate, comprehensive explanation of all the important concepts of Japanese. Not very user-friendly, but this taught me more than any other book when I started learning.
4. Maybe only available in Japanese, but I found excellent grammar books for the various levels of the JLPT in: "完全マスター: 日本語能力試験文法問題対策" these include an explanation and examples for ALL the grammar that could appear on the test, very very useful.
bad buys:
1."Essential Kanji": It seems to be popular, but all the readings are in romaji, there are hardly any example compounds for each character, and not as many look-up methods as the competition. I bought it but never used it.
2. "A Japanese Reader: Graded Lessons in the Modern Language."
By Roy Andrew Miller: refers to the Martin book I recommended above, but the fact is that it contains reading examples mainly written in the 50s. Despite this, the title, cover and preface all claim that it is a reader in the 'modern' language (this was obviously true at the time it was first published, but although the edition I bought had a nice new cover from the 90s reprint the publishers conveniently left all the references to 'Japanese as it is actually written today). It might be OK if you want to study older forms of the language, but I felt very ripped off once I realised the actual content.
I'd be interested to hear anyone else's tips/warnings.