The capitalization depends in which part of the world you live!
\documentclass{minimal}
\usepackage{siunitx}
\begin{document}
The pump in the US is pumping \SI{100}{\liter\per\second},
whereas in the rest of the world is pumping \SI{100}{\litre\per\second}.
\end{document}
As usual Joseph's siunitx package will typeset it correctly, except in South Africa, where the convention was and is to a large extend to use a cursive (l). Personally I never capitalize the l, after all you wouldn't capitalize in, so why would one capitalize litres and run the risk of the lb's complaining? In addition SI units only capitalize units that are derived from a person's name. As for the space you unquestionably need it!
\thinspacemake sense instead of a "full" space? – morbusg Jan 6 '11 at 9:46siunitxdefault. – Joseph Wright♦ Jan 6 '11 at 13:38