Here's an interesting article (spotted on kitabkhana) on Vladimir Nabokov as a translator. Nabokov, of course, was a rare example of an eminent writer in two languages, Russian and English (and achieved greater fame in English, which was not his native tongue), and translated several of his own works. There are two schools of translation, the literal style and the free style. A literal translation often sounds absurd, because the nuances of each language are different. A free translation, that seeks to convey nuances rather than literal meanings, is criticised for not being what the original author intended. The article discusses Nabokov's efforts in both styles: he translated "Alice in Wonderland" freely, his motive being to convey to a Russian child the same sort of light-hearted absurdity that an English child would read in the original, while he translated "Eugene Onegin" literally, sacrificing metre and structure in the verse for literal meaning (which was liberally footnoted for the benefit of non-Russians who would not get the nuances).
With "Alice", a major difficulty is translating the wordplay and verbal humour. Nabokov didn't even try, for the most part -- he replaced the parodic poems ("Father William", "'Tis the voice of the sluggard", etc) with his own parodies of Russian poems. (Incidentally, the original versions of these preachy English poems have long since been forgotten in favour of Carroll's versions -- so an English-speaking child today does not get the same flavour of the book that Carroll's original audience got. Much of the wordplay, too, may be lost on the non-English: Martin Gardner's "The Annotated Alice" is a useful guide to many hidden gems in the book.) In contrast, with "Eugene Onegin", Nabokov was probably writing for scholars (according to the article), and preferred a literalist translation.
The description of Nabokov's "Alice" reminds me of a translation I'm much more familiar with: Anthea Bell and Derek Hockridge's English versions of Goscinny and Uderzo's "Asterix". I read the English versions extensively as a child, but read some of the French originals only as an adult. (My French is certainly not good enough to "get" everything, but this site was a big help.) It is interesting how the translations differ from the originals: again, individual jokes, and sometimes entire themes (like the jokes on the Arvernian/Auvergnian accent in "The Chieftain's Shield") are replaced in translation. This article by Bell goes into more details. The most striking example is "Asterix in Britain", where she and Hockridge discussed the matter with Goscinny (who spoke excellent English); he paid them the ultimate compliment of saying he wished he'd thought of some of their jokes himself.
But what about "serious" literature? A literal translation may have unintended consequences: turns of phrase that seem natural in one language seem odd in the other. When I read translations of Jorge Luis Borges, for example, I wonder whether a phrase like "innumerable contrition" or "the unanimous night" is an odd-sounding literal translation of something natural-sounding in Spanish, or a literal translation that sounds just as strange in Spanish, or a free translation that evokes the flavour of the original.
Stanislaw Lem's "Cyberiad", translated by Michael Kandel, contains some astonishing poems such as "Love and Tensor Algebra" ("Cancel me not - for what then shall remain? / Abscissas some mantissas, modules, modes, / A root or two, a torus and a node: / The inverse of my verse, a null domain.")
Surely these can't be literal translations.
For the most part, I prefer free translations, especially with poetry but also with prose. It seems to me that literal translations require scholarliness, while free translations require artistry; and the artistry pays off.
Here is one example where, knowing the free translation, I went looking for a literal one and was severely disappointed. The poem is Federico Garcia Lorca's "Little Viennese Waltz", a literal translation by Greg Simon and Steven White is here, and a free translation by Leonard Cohen here. Here are the first stanzas.
Literal (Simon and White):
In Vienna there are ten little girls,
a shoulder for death to cry on,
and a forest of dried pigeons.
There is a fragment of tomorrow
in the museum of winter frost.
There is a thousand-windowed dance hall.
Ay, ay, ay, ay!
Take this close-mouthed waltz.
Now in Vienna there's ten pretty women
There's a shoulder where Death comes to cry
There's a lobby with nine hundred windows
There's a tree where the doves go to die
There's a piece that was torn from the morning
And it hangs in the Gallery of Frost
Ay, Ay, Ay, Ay
Take this waltz, take this waltz
Take this waltz with the clamp on its jaws
The literal translation says nothing to me. However, clearly the Spanish original spoke to Cohen, and Cohen's version speaks to me (sort of -- I still don't really understand it but I like the imagery). So Cohen did his job correctly, as far as I'm concerned. He recorded it in 1988 on his album "I'm your man"; an audio excerpt is in the link above and also on Amazon's page.