When formatting is input into a book (using the § character), if the formatting continues onto the next line it gets lost whenever the book is actually signed. If the book is still a book and quill, it still displays correctly even if you close and re-enter the book and quill. It is only after it is signed that it displays incorrectly.
The formatting is NOT being lost in the datatags from the convert from book and quill -> written book. I ran /entitydata @e[type=Item,c=1] {} with them dropped on the ground, and the attached .txt files are the results. In there "I am not a killer!" is still wrapped in formatting codes.
Visually, you can see it lose the formatting on "I am not a killer!" (killer! becomes un-italicized), and pretty much the whole second paragraph.
The book displayed correctly in 14w21b, which is the version the map I'm updating was released for (which is what this book page comes from).
EDIT: Using json also doesn't keep formatting correctly. Using the command in command-written_book.txt (attached), the formatting doesn't STOP for the italics until the newline. The "I am not a killer!" 's italic formatting continues on to the next "Please". Looking at the entitydata for the item, I can see why this may be the case. It didn't keep the italic:false explicitly in there, and the formatting seems to bleed into the next characters.
I seem to remember something like this for /tellraws as well, and both can be fixed by giving the next block of text some tag that doesn't actually change the formatting of the text. In this case, I added a color:black tag to the "Please..." block and it fixed it.
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Unfixable. MC-31113

@Sonic Alright, then how are survival players supposed to put formatting into written books? And why does it stay formatted correctly in book and quills but break as a written book? Even if this isn't a bug per-say (which it is), it should at least be looked at by the Mojang team.
If the intent is that survival players shouldn't be able to format books anymore, the select character shouldn't be able to be pasted into a book and quill. The possible best solution is to have some algorithm to convert these old books from using select character formatting to the new json formatting.

This happened to me, too. Only 1.8.x Versions contain this bug; I tested it in vanilla MC 1.7 and 1.8.
I tried to write book + quill with coloured letters by editing each page with "§4" at the beginning. But after signing the book only the first line was coloured in red and not (as expected) the whole page.
This happens also with formatted text written (and correctly displayed in 1.7) in 1.7! Changing a singleplayer world from 1.7 to 1.8 breaks the signed books.
Greets from Germany

From some of the pictures posted on Twitter (~a week ago), it looks like this is going to be irrelevant pretty soon. They showed off having colored text in chat (which isn't possible w/o /tellraw at the moment). I'm assuming they will be looking at books when they do that. If not, they should.