I've toyed with the idea of using Markdown. As long as the formatting doesn't get in the way of the writing is the key. People have a real problem with focusing on the work that matters. It's really easy to procrastinate by doing busy-work like making sure you're using the right type of bullets for your lists.
My original idea was to have formatting be a completely separate mode. But the more I think about the problem in general, I realize that at some point, it's impossible to 100% disassociate content from presentation. Markdown is probably the best compromise. Some other people have had success with writing full, going-to-print books through Markdown. It's certainly a better choice than a full WYSIWYG or GUI editor.
Formatting is also one of those features that people think they need when they don't. Currently, you write into individual chapters, and the chapters get concatenated correctly to have page breaks and headers. There are many different types of books that need no more formatting than that, novels in particular. I'd rather spend time working on getting full ePub docs implemented (I can write HTML files to ZIP files right now, but haven't done much beyond that, more just need to read the spec and get it done at this point), or getting some of the flow-encouraging mini-games made. Or finally building a real server (this is all 100% client-side right now) so I can let people publish their writing directly to their own blog.
I also need to spend some time in the marketing department. There is a lot to do. It's been just under a month since I threw away the work I was doing in Java (from a year and a half ago) and restarted in HTML5.
I could certainly use some help ;)