The most recent Mind Meld over at SF Signal is on the topic of The Best Sword & Sorcery Stories. Needless to say there's a bunch of great reading suggestions to inspire fantasy gaming. All the genre stalwarts are there, like REH, CAS, CL Moore, Leiber, Moorcock and Vance.
There's also mention of some more recent titles, like Glen Cook's (who I've met) Black Company series, and Steven Brust's Vlad Taltos books. I'm a bit surprised to find Zelazny's Amber books mentioned, but I guess they fit. And I'm glad to see Tanith Lee's books getting recognition. I'd add her Tales of the Flat Earth books to the list even though they cover more genre ground that just S&S.
The only omission I noticed is Andre Norton, who was a member of SAGA and had stories included in Lin Carter's Flashing Swords anthologies. While they might not be S&S in the strictest sense, she also wrote the Witch World series. And as the author of Quag Keep (1979) she has to be included on any list of fantasy books related to gaming.