Unlike the other TAs, I don't think I have a "favorite" craft book per se. I have dozens that I have found quite helpful at particular times for particular purposes. Recently most of my reading has focused on that thorny area of plotting, particularly internal vs. external plot. Some texts that have been esepcially useful:
20 Master Plots and How To Build Them by Ronald Tobias
The Plot Whisperer: Secrets of Story Structure Any Writer Can Master by Martha Alderson
Steal This Plot: A Writer's Guide to Story Structure and Plagiarism by June Noble and William Noble
I want to mention another book in this vein that may not exactly qualify as a craft book but that I have been reading with great interest.
Hit Lit: Cracking the Code of the Twentieth Century's Bestsellers, by James W. Hall, provides an academic's literary analysis of 12 common qualities of 12 top-selling (adult) novels, from To Kill a Mockingbird to Gone with the Wind to The Godfather.
Whether or not one is intentionally setting out to write a "commercial" novel, this is an informative and fasciating book. Some of Hall's conclusions are certainly subject to debate, but I think I will always view popular literature (and perhaps my own ideas) through a different lens now that I've read this book. --Jeanne Marie