I propose to use Sphinx to generate the documentation. The text will probably be stored in a Subversion repository, which could be svn.zope.org, for example. All of the book code will also live in a repository. I'm not opposed to the use of Github or Bitbucket if most people think that's the way to go, but personally I find I can get by with the above mentioned tools.
After we have at least a couple of chapters in a presentable state, the documentation could be automatically generated every day, so we can start to have a (slightly) useful resource well before the book is finished. We might be able to give the book a home like book.zodb.org or something.
Right now I'm not sure about whether we should use a wiki or an issue tracker, but it's something that could become useful if more people participate as voluntary reviewers of the book.
Well, this is how I see the writing process at the moment. Am I missing something? Do you have any ideas or suggestions? I'm willing to consider other options if that would get more people participating in the process.