Keeping track of bibliography references for an entire research group

I accomplish this using the groups feature of Mendeley. It works on all three major OS's, allows you to share bibliographies easily with both your group and external collaborators. It also allows something that I think is very important -- lots of bibliographies on particular topics within the realm of what my group does. See, for example

• http://www.mendeley.com/groups/1045561/runge-kutta-stability-regions/papers/
• http://www.mendeley.com/groups/1070421/nonlinear-hyperbolic-pde-solvers-on-gpus/papers/

I should mention that Mendeley's web interface to bibliographies is awful. But the desktop interface is quite nice and (most importantly) can export Bibtex.

Mendeley does store your data in the cloud (if you consider a bibliography to be "your data").

Update: I stopped using Mendeley when it was bought by Elsevier. I haven't found a satisfactory replacement.

If you're using LaTeX, you can set up a .bib file on a shared drive and everyone can reference and add to it as necessary using whatever program they like. I'm a fan of BibDesk, personally.

If you have a PHP server running somewhere, I would definitely recommend Aigaion. From the website, they say:

Aigaion provides a bibliography management environment that supports a user in just this: Organizing and managing a complete bibliography, from small personal bibliographies to bibliographies for e.g. a complete research department.

I've been using it in the past on a project, and it's really helpful to manage a bibliography for an entire group: you can define collections, you can annotate each entry, and you can export easily the bibliography at least to Bibtex and RIS (probably more, but I don't remember exactly, as I was using only Bibtex). You can at the same time manage references to be read by students, and publications generated by the group. Plus, it's open source :)