When faced with a quiet evening with my flatmate we may well decide to watch a film. Cue: "What do you fancy?" and an hour of scanning Tiscali timidly pointing out stuff we think the other person might be okay with - All the while both secretly wanting to watch 'Hostel' or some other such crap, but presuming the other wouldn't want to see that in a million years.
The way we've found round this, which also works in other situations and with bigger groups, is one person chooses a shortlist, which the other then picks from.
If there's two of you, have a shortlist of 3 or 4. If there's three of you, the first picks 5, the second narrows it down to 3 and the last person chooses.
The key is that if you're picking several films you don't have to worry so much about what the other person wants - as long as you have a little variety in your shortlist (5 mexican restaurants is not a cool list) there's bound to be something they fancy on it.
Failing that there's a neat little iPhone app called iChoose - but you'll still need that shortlist...