Excellent and timely choice for the Nobel Prize in Economics. Here's a comprehensive background courtesy of Tyler Cowen as well as an overview of Krugman's New Trade Theory by Alex Tabarrok. Krugman's books The Accidental Theorist and Pedding Prosperity are among my favorites. For more, you can visit his Unofficial Web Page.
Update Oct-16-2008: Here's Paul Krugman explaining in layman's terms the work for which he was given the award.