The index is an essential ingredient in having a successful computer book, and the article in TidBITS-332, The Process of Publishing, completely omitted that topic. A book needs a good index for many reasons, not the least of which is that potential purchasers, while browsing in a book store, use the table of contents and the index as tools for deciding whether or not to purchase the book.
I have written 14 books, mostly on PostScript and other high-end graphics subjects. In my experience, publishers handle index preparation in three ways. Some publishers farm it out to professionals and charge the author's royalty account. Some allow or require the author to prepare the index (or have it prepared) themselves. And finally, some publishers permit the author to choose a professional to prepare the index and, in some cases, even share the cost. [Another possibility is that the publisher generates the index with no charge to the author and with little or no control given to the author, which is the case with Hayden Books. -Adam]
The index for a book is one of the most important features that the book has. As a reader, I find a good index makes using a book a pleasure and a poor index makes finding anything a real chore. As a result, I usually ask publishers to let me pick a professional indexer and pay for the index out of my royalty account. This gives me some control over the index quality and ensures that I end up with an index that contributes to the book. Also, by choosing my own indexer, I know what the cost will be before the indexer starts work. Unfortunately, this doesn't always work; some publishers won't let the author participate at all.
Generally, in my experience, the worst indices are those prepared by authors. Indexing is a specialized skill, and deserves respect. (And, if you think authors work under deadline pressures, consider the indexer who generally has no more than a few days to index the book completely.) There is a society of professional indexers and I have found that these folks do the best work. I'd point out two main issues to a fledgling author. First, someone has to prepare the index for your book, and there's a good chance that you'll be expected to pay for it - out of royalties, true, but it's still your money. Second, don't do it yourself - a professional will do a better job and make your book more successful.
[For more information about professional indexing, check out the Web site for the American Society of Indexers at the URL below. -Adam]