Lady & Bird
It's quite possible I missed the boat on this release last summer (though Keenly Observed didn't), but I've just discovered Lady & Bird. This Icelandic duo is made up of Keren Ann Zeidel and Bardi Johannsson (of Bang Gang). It is my understanding that their lone, self-titled release (a concept album, no less) initially hit shelves in 2003. However, only in June 2006 was it finally released to American audiences. Their sound is very much of the atmospheric variety, heavily utilizing breathy female vocals. I won't claim that every moment of the album worked for me, but there are enough highlights to keep me coming back for more (including covers of Lou Reed and the theme from "M*A*S*H"). A couple tracks:
Lady & Bird - Suicide is Painless [M*A*S*H theme] Lady & Bird - Run in the Morning Sun
If you'd like to pick up the album, there are a number of inexpensive copies available from Amazon.