What will happen if a gamma-ray burst hits the Earth? Is there any probability that a gamma-ray burst (GRB) could affect the Earth?
 A: The actual effects of a Gamma-ray Burst on the earth have been thought about a great deal.  There is some thought that the Ordovician extinction was caused by a GRB (PDF Paper).  This is also detailed in a couple of astrophysical journals.
Astrophysical Journal, 2007:

Gamma-ray bursts (GRBs) directed at Earth from within a few kiloparsecs may have damaged the biosphere, primarily through changes in atmospheric chemistry that admit greatly increased solar UV. However, GRBs are highly variable in spectrum and duration. Recent observations indicate that short (~0.1 s) burst GRBs, which have harder spectra, may be sufficiently abundant at low redshift that they may offer an additional significant effect. A much longer timescale is associated with shock breakout luminosity observed in the soft X-ray (~103 s) and UV (~105 s) emission and radioactive decay gamma-ray line radiation emitted during the light-curve phase of supernovae (~107 s). Here, we generalize our atmospheric computations to include a broad range of peak photon energies and investigate the effect of burst duration while holding total fluence and other parameters constant. The results can be used to estimate the probable impact of various kinds of ionizing events (such as short GRBs, X-ray flashes, and supernovae) on the Earth's atmosphere. We find that the ultimate intensity of atmospheric effects varies only slightly with burst duration from 10-1 to 108 s. Therefore, the effect of many astrophysical events causing atmospheric ionization can be approximated without including time development. Detailed modeling requires specification of the season and latitude of the event. Harder photon spectra produce greater atmospheric effects for spectra with peaks up to about 20 MeV because of greater penetration into the stratosphere. 

Astrophysical Journal, 2005:

Gamma-ray bursts (GRBs) are likely to have made a number of significant impacts on the Earth during the last billion years. The gamma radiation from a burst within a few kiloparsecs would quickly deplete much of the Earth's protective ozone layer, allowing an increase in solar UVB radiation reaching the surface. This radiation is harmful to life, damaging DNA and causing sunburn. In addition, NO2 produced in the atmosphere would cause a decrease in visible sunlight reaching the surface and could cause global cooling. Nitric acid rain could stress portions of the biosphere, but the increased nitrate deposition could be helpful to land plants. We have used a two-dimensional atmospheric model to investigate the effects on the Earth's atmosphere of GRBs delivering a range of fluences, at various latitudes, at the equinoxes and solstices, and at different times of day. We have estimated DNA damage levels caused by increased solar UVB radiation, reduction in solar visible light due to NO2 opacity, and deposition of nitrates through rainout of HNO3. For the ``typical'' nearest burst in the last billion years, we find globally averaged ozone depletion up to 38%. Localized depletion reaches as much as 74%. Significant global depletion (at least 10%) persists up to about 7 yr after the burst. Our results depend strongly on time of year and latitude over which the burst occurs. The impact scales with the total fluence of the GRB at the Earth but is insensitive to the time of day of the burst and its duration (1-1000 s). We find DNA damage of up to 16 times the normal annual global average, well above lethal levels for simple life forms such as phytoplankton. The greatest damage occurs at mid- to low latitudes. We find reductions in visible sunlight of a few percent, primarily in the polar regions. Nitrate deposition similar to or slightly greater than that currently caused by lightning is also observed, lasting several years. We discuss how these results support the hypothesis that the Late Ordovician mass extinction may have been initiated by a GRB. 

However, the book that I recommend the most is Dr. Phil Plaits Death from the Skies.  Not only does he explain it in a manner that is understandable and still has the appropriate detail (i.e. it would be devastating, but the chances are remote).  Furthermore, he discusses the actual chances in realistic terms instead of being too nebulous or evasive.  I think this book is really the best book for answering your GRB question.
