There is an enormous quantity of information out there about PublishAmerica, sometimes called Publish America (some links are at the end). But if you are thinking about signing a contract with them, there's really only one thing you need to know. Just one. You ready?
Your book will not be on bookstore shelves.
Period. Bookstores won't stock your book, and you won't find it on bookstores shelves—unless you've personally approached that bookstore, and sometimes not even then.
Do you want to sell lots of books? Do you want to sell books to people you don't already know or people you haven't met face-to-face?
If you do, you want your book in bookstores. Over half of all books are sold in brick-and-mortar bookstores.  Why? Among other things, many people find it easier to part with money for a book if they've been able to flip through it first; bookstores are better for impulse buys and instant gratification; it's still much easier to discover an unknown book when browsing physical bookshelves; and there's no shipping charge.
Here are the reasons why bookstores will not place your book on the shelves if you use PublishAmerica:
Suppose that hurdle has been cleared; perhaps you personally contacted a local bookstore to tell them that your book exists. The following hurdles, however, remain:
In either case, the non-selling book has cost the bookstore, by taking up shelf space that could have gone to a book that did sell (that is, that did make money for the store); but with a PublishAmerica book, the bookstore is additionally out the cost of the book.
All these reasons together are why bookstores aren't going to put PublishAmerica books on their shelves. Consider two of the chains, Borders and Barnes & Noble. You can confirm for yourself that the vast majority of PublishAmerica books are not on shelves in Borders stores by searching store inventory online at <http://www.bordersstores.com/>. (Note: You may need to add stores first under "My Stores.") Barnes & Noble doesn't allow inventory searching online, but its CEO told the Washington Post, "if authors want their books in stores, they need to go the traditional publishing route." 
Do you believe in your book? Do you want it on shelves—of multiple bookstores, not just the one or two in your area that might stock your book if you personally beg and plead, or even give your own copies to them?  Then you should do better by your book than PublishAmerica, because if your book comes out through PublishAmerica, it will not be on bookstore shelves.
What about PublishAmerica's claims (at great length) that it does sell books through brick and mortar bookstores?
First of all, if someone special-orders a PublishAmerica book through a bookstore, that technically counts as a "sale" through that store. That doesn't mean that the book was on the shelf.
Second, even using PublishAmerica's own numbers, it's very clear that they are not getting books on store shelves:
Those books aren't being sold through bookstore shelves, but through individual special orders. Moreover, a company that engages in this kind of sleight-of-hand is not a company you want to trust your book to. And that is the only thing you need to know about PublishAmerica: your book will not be on bookstore shelves, even though they try to convince you otherwise.
 "Despite the growth in online sales, more than 55 percent of books are still sold in stores, according to Ipsos BookTrends data." Paula Span, "Making Books," Washington Post, January 23, 2005. <http://www.washingtonpost.com/ac2/wp-dyn/A25187-2005Jan20>. [back]
 For instance, Tor Books has (1) a sales and marketing department; (2) an advertising and promotion department; and (3) a publicity department, all devoted to selling books. <http://www.nielsenhayden.com/makinglight/archives/005292.html#50851>. [back]
 You can see what catalogs look like at the website of St. Martin's Press: <http://www.stmartins.com/Booksellers/catalogs.html>. [back]
 Instead, PublishAmerica authors occasionally propose putting out their own catalog (and charging for it). <http://www.absolutewrite.com/forums/showthread.php?p=4895#post4895>. [back]
 According to a January 22, 2005, article, PublishAmerica only had "plans to start a full-time marketing department" (emphasis added). Hillel Italie, The Associated Press, "Critics and supporters debate success of fast-rising PublishAmerica," January 22, 2005 <http://www.post-gazette.com/pg/05022/446283.stm>. [back]
 The average price of an adult fiction trade paperback in 2004 was $14.95. This and other averages were reported by the School Library Journal and quoted here: <http://www.absolutewrite.com/forums/showthread.php?p=99593#post99593>. An examination of data at Amazon.com in August 2004 found that the mean retail price of a 200-page trade-sized softcover book from PublishAmerica was $19.95. PublishAmerica, Yes or No? Facts and Figures, <http://payn.freelinuxhost.com/facts_and_figures.htm>.
The current retail prices of PublishAmerica books can be found at its online bookstore: <http://www.publishamerica.com/shopping/index.htm>. [back]
 PublishAmerica F.A.Q.'s, bullet point four: "Our books are non-returnable." <http://www.publishamerica.com/faqs.htm> (as of April 24, 2005; emphasis in original). [back]
 "[B]ooks are one of the few commodities retailers can return if they don't sell -- except for print-on-demand books, which aren't returnable and therefore don't get stocked by national chains." Washington Post article, <http://www.washingtonpost.com/ac2/wp-dyn/A25187-2005Jan20>. Here's a longer description of the returns system: <http://www.absolutewrite.com/forums/showthread.php?p=123293#post123293>. [back]
 According to a bookstore owner, PublishAmerica gives bookstores (as opposed to authors) a 10% to 20% discount: <http://www.absolutewrite.com/forums/showthread.php?p=117333#post117333>. Trade publishers generally give a 40% discount: <http://www.absolutewrite.com/forums/showthread.php?p=117517#post117517>. [back]
 The Atlanta Nights sting submitted a deliberately unpublishable book to PublishAmerica, which accepted it: <http://critters.critique.org/sting/>. PublishAmerica has admitted that the members of its Acquisitions "do not read every line of the manuscript; they read only certain sections." <http://www.absolutewrite.com/forums/showthread.php?p=159759#post159759>. [back]
 Three reports of entirely un-edited books: "'They publish books exactly as they are submitted,' says [PublishAmerica author Conny] Bryceland. It wasn't until she received her complimentary copies, she says, that she realized 'not a word of editing had been done.'" Susan Pagini, "Paperback Writer," San Antonio Current, June 24, 2004 <http://www.sacurrent.com/site/news.cfm?newsid=12073075&BRD=2318&PAG=461&dept_id=484045&rfi=6>; <http://www.absolutewrite.com/forums/showthread.php?p=4235#post4235> and immediately following post. [back]
 "Editors typically spend just two days on a book, [co-founder Larry] Clopper said, primarily checking for grammar and spelling." Associated Press article, <http://www.post-gazette.com/pg/05022/446283.stm>; "[S]ince editors zoom through an average of two books a week, they can't pay much attention to content, which leads one irate PublishAmerica writer to brand it an 'author mill.'" Washington Post article, <http://www.washingtonpost.com/ac2/wp-dyn/A25187-2005Jan20>. [back]
 See above note, and also these accounts of getting electronic files ready to be turned into books: <http://www.absolutewrite.com/forums/showthread.php?p=4197#post4197> and <http://www.absolutewrite.com/forums/showthread.php?p=6954#post6966>. [back]
 Two of many reports about errors that PublishAmerica introduced into books: <http://www.absolutewrite.com/forums/showthread.php?p=7383#post7383> and <http://www.digitalmedievalist.com/writing/pa.html>. For a specific and particularly egregious example, there's Phil Dolan's non-fiction account of the Battle of Okinawa, A Handsome Guy, in which the town of "Itoman" was spelled throughout as "AUTOIMMUNE": <http://www.absolutewrite.com/forums/showthread.php?p=159170#post159170>. [back]
 Ingram's press release: <https://www.lightningsource.com/ingramstockstrategy.htm>. Self-publishing expert Dan Poynter on some implications of the rumored plan, before it was officially announced: <http://www.absolutewrite.com/forums/showthread.php?p=4065#post4065>.
Note that according to the press release, Lightning Source will keep on hand "one copy of all new books and any currently out of stock books with a recent sale history." More often than not, even PublishAmerica's self-proclaimed best-sellers (see note 20) have zero books sold through Ingram. Thus, almost all of PublishAmerica's older books will not be stocked while the new policy is being implemented. [back]
 Washington Post article, <http://www.washingtonpost.com/ac2/wp-dyn/A25187-2005Jan20>. Indeed, in August 2004, not one of PublishAmerica's 3552 titles published in 2003 and 2004 were on-shelf in a Modesto, California, Barnes & Noble. PublishAmerica, Yes or No? Facts and Figures, <http://payn.freelinuxhost.com/facts_and_figures.htm>. [back]
 Just one verifiable bookstore (or library) placement has been reported that didn't involve personal appeals, often at great length, and that person has no idea how it happened. <http://www.absolutewrite.com/forums/showthread.php?p=146355#post146355>. Here is a typical example of the efforts it takes to get a PublishAmerica book shelved: <http://www.absolutewrite.com/forums/showthread.php?p=126269#post126269>, and one example of the frequent discussions among PublishAmerica authors about how difficult it is to get their books stocked in bookstores: <http://www.absolutewrite.com/forums/showthread.php?p=1763#post1763>. If you yourself are an exception—congratulations, truly, but you are an exception. [back]
 <http://www.publishamerica.com/facts/index.htm>, as of April 24, 2005. [back]
 This is also in line with PublishAmerica's statements about its sales through Barnes & Noble. See <http://www.absolutewrite.com/forums/showthread.php?p=132786#post132786> and subsequent posts for these statements and analysis of the numbers. [back]
 For three months in 2004, PublishAmerica took out an ad in the New York Times to list its ten best-sellers for the previous month. At the time the books were listed in the ad, the most one had sold through Ingram for all of 2004 was nineteen (19). More than half (18/30) had zero (0) sales through Ingram for 2004, or weren't listed with Ingram at all. (So how did they make the top-sellers list? The list counted books the authors bought themselves.)
Only one PublishAmerica book has ever sold more than 5,000 copies, which according to the Washington Post is "low-end figures for a major publisher"; the article didn't say how the sales were made. <http://www.washingtonpost.com/ac2/wp-dyn/A25187-2005Jan20>. [back]
Other information on PublishAmerica:
As a follow-up to the Washington Post article, there was an online discussion that is worth reading: <http://www.washingtonpost.com/wp-dyn/articles/A24113-2005Jan20.html>.
Among much other great stuff, Teresa Nielsen Hayden's blog Making Light has a wealth of information on publishing (she is an editor at Tor Books). Of specific interest here:
Science Fiction and Fantasy Writers of America's Writer Beware has general information on "Print On Demand", <http://www.sfwa.org/beware/printondemand.html>, and on vanity publishers and author mills, <http://www.sfwa.org/beware/subsidypublishers.html>.
PublishAmerica, Yes or No? presents additional arguments for and against PublishAmerica: <http://payn.freelinuxhost.com/>.
And for enormous quantities of information, including all the latest developments, visit the Absolute Write Water Cooler's Bewares and Background Check board, which includes one ongoing discussion on PublishAmerica and several reference threads: <http://www.absolutewrite.com/forums/forumdisplay.php?f=22>.
General Publishing Information:
If you're now wondering what publisher you should trust your book to—well, that's outside the scope of this work, but here are a handful of aphorisms and reference links to get you started:
Copyright 2005 by Kate Nepveu [*]. You may, of course, link to this work freely, but do not republish it without e-mailing me for permission (I want to ensure that it's always up-to-date). At present, this work is available in full at this page, <http://www.steelypips.org/miscellany/publishamerica.html>, and is reproduced in part at <http://www.absolutewrite.com/forums/showthread.php?p=149490#post149490>.
Comments, corrections, and constructive criticism are welcomed: <firstname.lastname@example.org>.
[*] Who is neither a disgruntled PublishAmerica author, nor an author rejected by PublishAmerica, nor a fiction writer period, merely someone who saw a need for a specific and (relatively) concise document on this topic after watching a lot of PublishAmerica discussions. (Nor does she have something against PoD books; indeed, she encourages you to go buy her mother's PoD memoir of working with Romania's orphans.)