Washington Irving's "The Legend of Sleepy Hollow" is not a book, it's a short story, relating the tale of Ichabod Crane (as told to a fictional story teller named Deidrich Knickerbocker) over the course of all of 20 pages. You can read it in about half an hour.
It's a pretty dry story - there're only a few words of dialogue in the whole thing - but something about the story of Ichabod Crane being chased off by the Headless Horseman has had such a lasting effect on western culture as to inspire countless movies, TV shows, and plays. Headless horsemen rule.
Like many of Irving's best works, the story makes use of a lot of local legends and superstitions common in the small towns of the American Northeast in the early 19th century - a time when small towns were really comparatively isolated communities (today, Sleepy Hollow is a just a suburb of New York), with their own legends, lore and beliefs. The story is presented as a pretty-straightforward story that has been touched, over the years, by these superstitions and stories.
I suppose you can deconstruct it down to being a story of urban vs. rural mindsets, in which the educated man is made a fool of by countrified rubes. The urban/rural theme is, of course, still relevant, as it has been since the dawn of time. There's also a wonderful blend of humor and spookiness in the story, with a setting in an old rural village - reading the story, you can practically see the red and orange leaves, and practically taste all the food (most good adaptations have a scene or two that really makes you hungry as the Sleepy Hollowans gather for a harvest feast at tables veritably groaning with roasted turkey, beef, hams, pumpkin, vegetables...mmm....). But the fact remains: the story has stuck around because headless horsemen are cool.
Ichabod Crane - an educated yankee who comes to Tarry Town (Sleepy Hollow) to be the schoolmaster. He's known for his appetite, fancies himself to be quite the singer, and carries around a book of Cotton Mather's history of witchcraft in New England. Most versions portray him as either the tragicomic victim of a mean coquette or as a gold-digging jerk who thinks he's better than all of the hicks. You can do either of these without really veering from the text.
Katrina Van Tassel - daughter of Balthus, the wealthy farmer, and a known coquette. Today we'd call her a tease.
Abraham "Brom Bones" Van Brunt - leader of the "sleepy hollow boys," a local gang of pranksters. Usually portrayed as sort of a villain, but he's well-liked around town in the book. He's a prankster, but he's just a mischief-maker, not a bad guy
Ichabod goes after Katrina, and one night, after a quilting frolic (generally portratyed as a Halloween party, since the attendees gather around the fire to tell ghost stories after eating), he declares himself to her, and is then chased off by the headless horseman, whose tale was just told at the "frolic."
Now, rumors go around that he was killed, and that his spirit haunts the graveyard, but (though he sort of leaves it open in the end), Irving makes it fairly clear that the horseman was just Brom Bones in disguise, chasing away his rival, and that Ichabod was still alive, working as a lawyer and a politician far away. Of course, he also implies that Katrina turned Ichabod down, and had just been using him to make Brom jealous the whole time - so the chase was just Brom really rubbing it in after he'd already won.
However, one thing that nearly ALL versions that have been put on film or TV have in common is that the Horseman turns out to be real - sometimes they also have Brom dressing up as a horseman, but it always seems to turn out that there was a real one running around too.
For years, the rule of thumb was that the closer one stayed to the original, the better it would be. That all went out the window after Tim Burton took his turn, but I think the world is still waiting for a really great full-length version of the original story.
Trivia: while the story is not based on a true story, there was a person named Ichabod Crane. He was an army guy who knew Washington Irving, and he was pretty ticked off when he read the story. He's buried on Staten Island; local teenagers sometimes drink at his grave.
More Trivia: in 1839, Irving wrote a non-fiction update on the Sleepy Hollow area, lamenting that, while things hadn't changed much around town in the last several years, the town was slowly moving into the modern era. Read it here