My kids love to read. A lot. Anywhere from 4-10 books are read in our house every week. That's a lot of reading to track.
Goodreads makes the process simple. Using Goodreads (a web-based, social network for books), I created a virtual bookshelf for each child. When a book enters our "library," I add it to our Goodreads account, and mark its status as to-read.
When a book is started, I select the bookshelf of the person reading it, and update the status to currently reading. A book can be on multiple "shelves" at once, which allows me to also flag books as being either read-to-self or read-by-parents.
Once a book is completed, I either interview my son/daughter about the book and record the answers in the review section or have my son/daughter type up the review, along with the date the reading of the book was completed.
Goodreads then produces a Book Review that can be easily blogged with a simple cut-and-paste of the html code of the review, including an image of the book, when available (and they most often are). I use this to post the reviews to our private homeschooling blog as a record of the kids' reading.
Example:The Wheel on the School by Meindert DeJong
My reviewrating: 4 of 5 stars
It was a pretty good book. I liked the ending, and generally I just really liked it. The book was about kids in the village of Shora trying to get storks to come to Shora. The village learned that their roofs were too sharp, and that they needed more trees to have storks come to Shora. The village of Shora is at the seaside, in Holland. The majority of people in Shora helped get back storks to Shora.
The only thing I'm thinking of changing is to create accounts for each child on Goodreads as they're starting to read the same books, and the system only allows for one review per account. Otherwise, it's working out to be a great tool for our homeschooling record-keeping.