The Kite Runner by Khaled Hosseini (2003). Set primarily in Kabul and Afghanistan, but the world it describes — the Pashtun frontier, the bazaars, the Afghan refugee communities that poured into Peshawar — is the world you're walking through. The novel was written by an Afghan exile who never saw the Peshawar of his imagination; you get to see the real thing.
Empires of the Indus by Alice Albinia (2008). A journey up the Indus from the sea to the source, through history and the present day. Albinia passes through the Pashtun frontier and writes about Gandhara, the Khyber, and Peshawar with the kind of deep historical knowledge that makes the museum and the bazaars come alive. One of the best books written about Pakistan.
The Frontier Scouts by Charles Chenevix Trench (1985). A history of the paramilitary forces — the Khyber Rifles and others — that policed the North-West Frontier from the British era into the late 20th century. Dry in places but full of detail about the tribes, the passes, and the culture of the frontier that produced Peshawar. Good background if you plan to visit the Khyber Pass.
In the Line of Fire by Pervez Musharraf (2006). The memoir of Pakistan's military ruler covers the post-9/11 transformation of the frontier region in detail. Flawed as history, indispensable as a primary source on how Peshawar and the tribal areas changed after 2001.