I would put "The Art of Game Design" at the front of the bookshelf of anyone that does game design work: http://www.amazon.com/The-Art-Game-Design-lenses/dp/01236949.... To me, this is the most valuable book I have on my bookshelf. Every time I pick it up, I scarcely read more than a few pages before I'm setting the book down to make a bunch of notes for new ideas I've had. The book is truly outstanding and practical, and will help give you a framework for figuring out what you want our game to be.

I've been developing games independently now for several years. Easily the most difficult part is the design. Merely implementing the game-- if only that was my biggest challenge!

Game design wise, the best are:

- The Art of Game Design by Jesse Schell: http://amzn.to/zFOiEk

It's pretty comprehensive, but I found it a bit "heads in the cloud" and not very hands on. The lenses give you some hands-on approach if you apply them though. If you are looking for a book with very specific "how-to-do-this-or-that" then it may not be your thing.

I like to pair this book with David Perry on Game Design: http://amzn.to/ytXF7G

That monster tomb is all hands-on and You can use it more like a cheatsheet:"OK I need a villain. Let me turn to the 'villain archetypes' section and pick one at random. OK he needs a weapon. Let me turn to the 'rifles' section and pick one at random" and so on.

I also really liked "Level Up!: The Guide to Great Video Game Design" by Scott Rogers: http://amzn.to/xuVjWU

It is the book I recommend to budding game developers because it is sort of like "Art of Game Design" lite. It covers most of the same topics but don't go into such an intellectual depth which is a GOOD thing for people just wrapping their heads around what game design is. Once they finish that, I move them to Schell's book.

Cheers

The actual game flOw (http://en.wikipedia.org/wiki/Flow_(video_game)) came out of this research. The use of Mihaly Csikszentmihalyi's theories of flow have been part of game design for a long time, and most of the stuff in the thesis is basically common sense with a few interesting thinking points.

Some other great literature on games that also discuss flow can be found in Jesse Schell's book (http://www.amazon.com/Art-Game-Design-book-lenses/dp/0123694...) or in Steve Swink's book (http://www.amazon.com/Game-Feel-Designers-Sensation-Kaufmann...).

(edit: no coffee yet)