Cosmetic vaginal surgery has become increasingly popular, and I have posted blog comments on it in the past. It can include labiaplasty (reducing large inner lips), or vaginoplasty (tightening the vagina).
Sometimes there are true medical indications, such as pain with sex, or tight clothes/biking riding from large inner lips, or a loose vagina that may draw in air or lack sensation during sex. Others may seek it for lesser reasons, such as aesthetics, or perceived (real or false) imperfections in their genitals. Psychological reasons may exist as well.
Here is an interesting brief article from the BBC which reports on this phenomenon:
http://news.bbc.co.uk/2/hi/health/8352711.stm
http://www.femaleurologyaz.blogspot.com