Write your book on whatever pleases you, and publish it as either .pdf or .ps. Most print shops will accept both. .djvu format is an option, but more rare then the above two.
As far as printing goes, yes, as someone suggested, you could edit your book in A5 format, which is somewhat unusual (not the format per se but the fact that books are not usually printed in that format ...).
If it is not a professionally done job on a larger scale (thousands of copies printed on large offset machines), I would suggesting editing your book in A4 format, and then when printing by using zoom function/print to fit printing it to A5 format. It is a standard option in Adobe Acrobat.
If the print shop has paper cutting capabilities, they may use the option to print both sides on paper, and then just cut it in two prior to binding it. Done it, works out very nicely.
After that you just bind it, and you're done.