It depends considerably on what you are willing to work with. Collaborating is complicated, not least because when you're editing someone else's section then you don't want to have to fight against their macros (which were, let's be honest, probably daft choices - unlike yours which, naturally, are elegant).
So I don't recommend using LaTeX directly as a collaborative system on a major project.
Here's the workflow I would recommend:
- Use a wiki with proper mathematical support and that can export to LaTeX. Instiki fits this.
- When writing a major section, write it in LaTeX and use my package for exporting LaTeX to Instiki's input syntax (blog post and package; the package is very much alpha release, but I'm using it for writing entries on the nLab so it is usable).
- When editing each other's stuff, use the wiki: the syntax is simple and intuitive so you're not always trying to work out what the other person meant, but nonetheless it isn't too difficult to use.
- When finished, export the lot back to LaTeX and produce a very nice edition of the book, with the added bonus of an online edition.