Cedar

I used to read tons of TW fic (it's the fandom that stole me away from HP all those years ago). There's some really great stuff. The flaws and gaps in the canon, as well as the overall brilliance and the range of genres and tones, really inspire creativity. This is just a drive-by visit, so I'm going to resist the temptation to look through my bookmarks and start reccing individual fics. But, if you go to my LJ memories, I seem to have over 80 fics bookmarked under "TW fic." *cough* (Fyi, I mostly ship Jack/Ianto, but am also fond of gen ensemble fics, Jack/Doctor, and Jack/any other sentient being, especially historical figures.)

During the heyday of the fandom, there was a superb recs site: torchwood_house

And here are some of my favorite TW writers (whom you may have encountered in other fandoms):
copperbadge aka sam_storyteller (especially for post-COE fix-its)
nancybrown (also has great fix-it fics)
amand_r (wildly imaginative--can't even begin to categorize...)
heddychaa aka hauldyourwhist (dark, psychological, explicit Jack/Ianto fics)
blue_fjords (cute, funny ensemble fics and Jack/Ianto)
neifile7 aka filomena (not sure if her stuff is still up, but she writes amazing historical fiction about Jack in other times)
azn_jack_fiend (darkly funny Jack-centric fics, often historical settings)
pocky_slash (mainly gen fics focusing on Gwen & Ianto friendship)

Enjoy! And drop me a line to let me know if you liked any of these fics.