Please feel free to add other books here in the comment section.
Homophobia: How We All Pay The Price: Warren Blumenfeld's analysis of this problem and why everyone concerned with the decline of civility in America needs to be concerned about it.
Created Equal: Why Gay Rights Matter to America by Michael Nava and Robert Dawidoff is an excellent analysis of why homophobia is a costly problem and how America in general, not just the gay community, would benefit by ending it.
And The Band Played On: by Randy Shilts is one of the great classics of investigative journalism, showing how the AIDS epidemic could have easily been halted in its early days if the politics of homophobia hadn't been allowed to prevent the Center for Disease Control from doing its job.
Conduct Unbecoming: Gays and Lesbians in the U.S. Military: by Randy Shilts. His last book and one of lasting importance to the debate over gays in the military. Shows conclusively why the opposition to allowing gays to serve openly in the military is really based on the homophobia of the Pentagon brass.
Again please add your suggestions here in the comments.