I was recently in charge of a cookbook fundraiser that did well (for what our goals were). It was a church project. I used the website www.cookbookprinter.com
and found it to be extremely helpful. You set up a password and username and then all recipes can be submitted online. They have stock covers and dividers or will help you create custom ones. (We did a custom cover that turned out lovely.) The staff there take the recipes and compile them in to book format. They are very helpful and will walk you through the whole process.
Pricing depends on the length of the cookbook and the size of the order. Ours was approx. 200 pages, and we ordered 500 and they were about $5 each. We then sold them for a minimum of $15. So far we have made about $3000 profit.
A lot of good points and pitfalls have been mentioned here. You have to decide how far you want to go, what quality of book you are looking for, and what your target selling audience is.
For us, we went through each recipe and checked for spelling errors, grammar, overall readability, etc. We did not test the recipes, but we read through to make sure the ingredients matched up with the instructions, and that the recipe followed a logical sequence. It helps to have people who are good at cooking read them over and make sure they make sense. We also reserved the right to delete any recipes we felt didn't fit with the cookbook (or just sounded plain awful). Any recipe that was submitted more than once we just put in the one time and labelled it with each contributors name. I also put a cap on how many recipes one person could contribute (as I had a few ladies put in over 50 each!)
It definitely is work and it takes time and a lot of willing contributors. You also have to be able to pay for the books up front. In my case we had the right group of people (both for contributing and for buying) and so it turned out to be a great fundraiser as well as a lovely keepsake for many families.