Robert Irwin's The Arabian Nightmare is an old favorite, a modern classic of horror/fantasy, written by a medievalist. A short review can be found at http://www.nthposition.com/thearabiannightmare.php
Presented by Washington Post book Michael Dirda columnist as an answer/rebuttal to Edward Said's Orientalism, Irwin has just published Dangerous Knowledge: Orientalism and Its Discontents. It looks to be a nice meaty (409 pp.) history of Western perceptions of the Middle East. I look forward to reading it.
Dirda's review can be found at:
http://www.washingtonpost.com/wp-dyn/content/article/2006/11/09/AR2006110901770.html