The Boston Globe has an exceptionally well researched article on the biology and neuropsychology of homosexuality.
While the search for a single ‘gay gene’ in humans has pretty much been abandoned, a substantial amount of work is now being conducted into the role of genetic factors and the time spent in the womb on sexuality.
One study, conducted by biologist Alan Sanders, is recruiting gay men with gay brothers to investigate any molecular genetic contributions to sexual orientation.
Other research is beginning to find a difference between sexual preference and sexual arousal. Early results suggest that for males, sexual arousal and sexual preference is strongly correlated (men prefer the sex that is capable of arousing them), whereas women are more capable of being aroused by either sex, despite the fact that they may be attracted to only one.
Some studies have found differences in brain structure between gay and straight men. In particular, a small area of the hypothalamus (known to be involved in sexual motivation) was found to differ in size in a controversial 1991 post-mortem study by neuroscientist Simon LeVay.
Link to Boston Globe article ‘What Makes People Gay?’.