thoughts on shelving the category of Urban Fantasy that she posted at Specnology to be interesting, and something that I rather agree with. But, shelving categories are something that the publishers set (at least as I understand it), although I've seen some real howlers there now and again: A book on the Queen Charlotte Islands was marked to be shelved under the Rocky Mountains, for example.
A section for urban fantasy might well work out well because there's so much of it these days, (some might say the entire teen section counts) but then you'd possibly end up with people going "but why isn't there a section for....?", leading to a gazillion little sub-sections. And it's all over the place.
Dies The Fire) to be Urban Fantasy-ish. It's certainly isn't science fiction, where it's currently shelved! And the same author has a werewolf book/series out now too. David Weber is (I think) due to have an urban fantasy type book come out later this year as well. That'll probably end up in science fiction with the rest of his books (which makes sense from the point of view of having all his books together).
Then there are the Laurell K. Hamilton books. Are they horror or urban fantasy, or something else? They're shelved in Horror, as are the books of Kelly Armstrong. And Kim Harrison. Sometimes I've seen her books shelved in Fantasy, and sometimes in Horror.
But, as Anassa pointed out, once you start, where do you stop? There's a lot of paranormal romance out there now too: Sherrilyn Kenyon, Lara Adrian, J.R. Ward and a whole lot of others are writing romances that could easily count as urban fantasy, depending on the definition used.
Initially, I'd just planned on posting the link to Anassa's post, and then commenting there, but the response turned into this, a whole post of it's own.