Trang Tien street at the lower end of Ho Hoan Kiem is the best place in Hanoi to purchase books. There are several bookstores that sell English books, although their choice is somewhat limited.
For travel guides, check out the dark, dirty and narrow lane at the upper end of the street: There are some people who sell copied travel guides (mostly Lonely Planet). If you barter well, you may obtain them for VND 40-60000. Sometimes, you'll run into these booksellers in the Old Town, too. For whatever reason their prices are much higher there and are not as easily to be forced down.
Another place to buy overprized books are some of the tourist cafes around the cathedral.
What to buy: If you plan to visit other countries in South East Asia I would recommend to buy travel guides for them in Hanoi. It may be cheaper.
What to pay: Depending on your bartering skills - $5 for a copied travel guide is enough!
If you want to visit books and stationery shops in Hanoi, there are many of them located along Hai Ba Trung Street and Trang Tien Street at the south end of Hoan Kiem Lake. Most of the books are in Vietnamese, and some of these shops sell souvenirs as well.
Mr. Dinh has been in business on Nha Tho Street for 9 years. Need something to read at bedtime? A travel guide to Vietnam or Hanoi? A Vietnamese phrasebook? Mr. Dinh has it all. He's a nice guy. Don't be fooled my imitations. Dinh is pronounced "ding"
What to buy: Sells, exchanges new and secondhand books.
What to pay: Much less than the US price, normally. Many books are used.