Sauron's Form

[Troll]

That is actually a pretty decent explanation of the Evil Lighthouse for those inclined to Jackson apologetics. No one ever said the Eye actually was Sauron, just that it was closely associated with him in some way.

[DerBerggeist]

When Frodo is first assaulted by "the knife in the dark" the other members of the party claim they only felt The Riders' presence and didn't really see them.
Also though, later in the books The Riders seem to have gained a physical presence on the battlefield.

Yes, the Riders were technically invisible to those not wearing the Ring, but they always wore black hoods, so anyone could "see" them even if they weren't wearing the Ring. If this wasn't the case then the hobbits wouldn't have called them "Black Riders" before the events near Amon Sûl.

[Mouth_Of_Sauron]

I'd always pictured Sauron as the Dark Lord, able to move between the corporeal and incorporeal, requiring time to regain his physical form after having been "vanquished" (see: Galin's wonderful quotes, awesome post). As I read the books, Sauron sat in his high tower in Mordor and brooded war. His "great eye" I simply interpreted as his ability to perceive the workings of Men and Elves in far-off places, through his spies, what we might call "clairvoyance" or "remote viewing" or generally just being one of the bad-ass abilities that come with being the Supreme Evil Lord of Middle Earth. The image of a large physical flaming eye never really crossed my mind. So when Jackson's adaptations came out, I kept assuming the Necromancer was still sitting in his big phallic tower brooding war, but the "great eye" was here put into a physical form a kind of "representation" of Sauron. When it came to my attention that Jackson intended the Eye to be Sauron HIMSELF rather than his device, my laurels were rescinded and I became quite disappointed.

[Erestor Arcamen]

Maybe they'll show Sauron at Dol Guldor in 'The Hobbit' and we'll see how they depict him, whether he's a giant fiery eye or a shadow or something.

[Mouth_Of_Sauron]

I imagine PJ's depiction of the Necromancer will be similar to his depiction during the victory of Isilidur scene in LotR, but in "flashbacks" and "visions", as to reconcile his Big Ugly Eye. Just a hunch, but I'll be taking bets.