I bumped into Laurence O'Dwyer the other evening at the George Szirtes evening in Dublin. Laurence read with me at our Poetry Ireland Introductions evening in late May 2005. Laurence's work has won awards and a good deal of attention already!
Anyway, in the pub afterwards, we had a great time talking about various aspects of poetry and sharing insights and resources that we had read on poets and other writers too. This site, recommended by Lar, is the American Literature Library and in particular you might check out Sherwood Anderson, in particular his Winesburg, Ohio. Very understated fiction and character realizations here, which go for the psychological, through the physical using fairly pared down language - the American idiom for the most part.
While you're there, look out for a very short story by Liam O'Flaherty, 'The Sniper' and my favourite lady from last year's 20thc Lit course, Virginia Woolf, with 'The Haunted House'.