Useful books on the core concepts:
Physical Computing: Sensing and Controlling the Physical World with Computers, Dan O'Sullivan and Tom Igoe ©2004, Thomson Course Technology PTR; ISBN: 159200346X
Includes all the stuff covered in class and lots of advanced examples as well. This book was developed from this course. You can get through the course without it, but it'll make your life a whole lot easier if you read it while taking the class. The code examples in the book are not written for Arduino, but the concepts for each exercise apply to Arduino as well as the controllers described in the book. Even without the specific code, the examples will be useful, especially when combined with the labs in this class.
Making Things Talk, 2nd edition, Tom Igoe ©2011, Make Books; ISBN: 978-1449392437
Introduction to communication between computers, including serial communications, wireless, networking, RFID, and more. Though some of the material is beyond the scope of this class, much of it may be useful in understanding computer communications.
Making Things Move, Dustyn Roberts ©2010,McGraw-Hill/TAB ISBN-10: 0071741674 | ISBN-13: 978-0071741675
Dustyn's book is an invaluable guide to construction of mechanical things. Whether you're making a simple motor project or a Mars rover, it's a good place to get started.
Below are recommended texts for the course in general. You have readings from the first three. All of them are good inspirational guides for physical computing and computing in general. They are not assigned, but you'll find them to be useful reading in physical interaction design.
The Design of Everyday Things, Donald A. Norman ©1990 Doubleday Books; ISBN: 0385267746
If you design at all, or work with people who do, read this. A lucid approach to the psychology of everyday interaction and how the objects we deal with could be better designed to match the strengths and weaknesses of the way we think. His predictions about physical interaction design and information design, some accurate and some not, are interesting history lessons eleven years after the first edition.
The Art of Interactive Design, Chris Crawford, ©2002 No Starch Press; ISBN: 1886411840
Written in a very casual style, this book nevertheless is an excellent and concise summary of what interaction design is, why it is important, and what problems it brings with it. Anyone seriously interested in interaction design, physical or not, should read this book.
Emotional Design: Why We Love (Or Hate) Everyday Things Donald A. Norman. Basic books, ©2005. ISBN: 0465051367.
In this book, Norman counters some of the points he makes in his first book, The Design of Everyday Things, by pointing out that we do make decisions about design based on emotional reasoning, and that design affects us emotionally. He describes Human reaction to design on three levels: the visceral, or how it appears; the behavioral, or how it acts; and reflective, or how it makes us think and feel about ourselves through our association with it.
The User Illusion: Cutting Consciousness Down to Size, Tor Nørretranders ©1998 Viking Press; ISBN: 0670875791
Makes the case that much of our experience of the world does not come to us through our consciousness; in fact, the majority of it dealt with pre-consciously.
The following are good references for electronics hobbyists. Take a look at both, and get one or the other as a general reference, or find an electronics reference of your own.
Getting Started with Arduino, Massimo Banzi ©2008, O'Reilly Media ISBN 10: 0-596-15551-4 | ISBN 13: 9780596155513
A straightforward beginners' guide to most of the beginning exercises in this class.
The booklet from the Arduino Starter Kit is also an excellent reference. Scott Fitzgerald, a frequent teacher of this class, was the main author. Starter kit PDF
Make: Electronics, Charles Platt, © 2009 Maker Media Inc, Sebastapol, CA; 1st edition ISBN: 0596153740. An excellent intro to electronics. Practical, readable, and enjoyable. Start here.
Encyclopedia of Electronic Components Volume 1: Resistors, Capacitors, Inductors, Switches, Encoders, Relays, Transistors, Charles Platt, ©2012 Maker Media, Inc, Sebastapol, CA; 1st edition ASIN B00COVJULI. A useful reference for all kinds of electronics components.
Getting Started in Electronics, Forrest M. Mims III, ©1983, Forrest M. Mims III
A very basic introduction to electricity and electronics, written in notebook style. Includes descriptions of the basic components and what they do, and how they relate to each other.
There Are No Electrons: Electronics for Earthlings, Ken Amdahl ©1991, Clearwater Publishing; ISBN-10: 0962781592 A light-hearted introduction to elecrical concepts in laypersons' terms.
Practical Electronics for Inventors. Paul Scherz, ©2000, McGraw-Hill Professional Publishing; ISBN: 0070580782
A more in-depth treatment of electronics, with many practical examples and illustrations. An excellent reference for those comfortable with the basic topics. The use of plumbing systems as examples to demonstrate electric principles makes for some very clear illustrations of how different components work. Good chapters on sound electronics and motors as well.
Fashioning Technology: a DIY Intro to Smart Crafting Syuzi Pakhchyan. Make books, ©2008. ISBN: 0596514379.
This book includes a nice introduction to basic electronics and a number of construction projects for simple electronic crafts. The construction techniques are aimed primarily at wearables and soft circuit projects, but they'reuseful for a number of other projects as well.
A longer list of books for inspiration and reference is available online at Tom's books link.