I'm seeing more and more collaborative novels on bookshelves nowadays--or perhaps I'm just noticing them more. Two members of my weekly writers' group are collaborating on a new espionage thriller series. Writing as Steven Graham, my buddies Candice Proctor (better known in the blogworld as C.S. Harris) and Steve Harris have their first book together, THE ARCHANGEL PROJECT, coming out in the spring of 2008, with the second one in the works. They've discussed their process a bit at some of our meetings. From what I recall, Steve, who spent years in military intelligence working on classified material, provides the background and research information. He and Candice work out the plot together, with Steve's knowledge of the world of espi0nage the critical factor. They work together on character development and dialogue. Candice writes the prose, while Steve reads and edits her drafts.
(They are married to each other, which I assume makes it easy to find time to work together on the books.)
Other collaborations being published are those between high-profile authors, such as James Patterson and Tom Clancy, with unknown or little-known co-authors. My impression of their arrangements is that the famous author suggests the basic plot, or even the full-blown plot, while the co-author does the actual research and writing. Most important is that the famous author lends his name, which guarantees book sales.
Other writing teams whose books are popular include Tori Carrington a.k.a Lori and Tony Karayianni; C.T. Adams and Cathy Clamp; Judith Michael a.k.a. Judith Barnard and Michael Fain; Ellery Queen a.k.a. Frederic Dannay and Manfred Bennington Lee ; Emma Lathen a.k.a Mary Jane Latsis and Martha Hennissart. There are so many others I won't attempt to list more. In Googling the topic, I came across whole books written about writing collaborations.
Of course, the script of almost every movie is a collaborative effort--it's unusual to find only one name in the credits.
Collaboration is more common in nonfiction work than in fiction, however. (When you're working with facts, facts, facts, it must be easier to divide up writing/research/development duties than dividing up a novel.)
Bob Mayer has a good post on collaborative writing at the Crusie-Mayer Writing Workshop--HE WROTE: Collaborating (aka Bob is always right). His writing collaboration with Jennifer Crusie has resulted in two books so far (the second to be released in August). Theirs is a full collaboration on the entire manuscript, in the sense that each writes approximately half of it. Bob writes the male characters and male P.O.V. scenes, while Jenny does the female characters and female P.O.V. scenes. Bob's post discusses other types of collaborations, too, and makes points about what you have to do to work successfully with a writing collaborator.
I can't really picture ever collaborating with another writer on a book, because I'm pretty much a lone-wolf kind of writer. Who knows, however--it could happen.