The following are steps to calculate canopy density and height from lidar points. First, you need lidar that has been classified into ground returns (bare earth) versus non-ground returns. This type of point classification is usually performed by your data provider. Secondly, you need to consider when the lidar was collected and the type of vegetation in the study area. If there are a lot of deciduous trees and the collection was performed during autumn (leaf off), the density calculation is not going to work.

The online help resources for Arc 10 are quite extensive and usually very helpful. 

http://resources.arcgis.com/en/help/main/10.1/index.html#//015w00000056000000

This page describes the methodology for estimating forest canopy density and height from LiDAR data.

Are you using Lidar, spectral data or both? If spectral, see attached; if looking for change detection methodology with spectral data see second attachment, although with version 9.1 (has that much changed in 10?). If using Lidar, I cannot help yet; the manuscript will be submitted soon.

Article A comparison of fine resolution census and image-based natio...

Article Forecasting the pattern and pace of Fagus forest expansion i...

Yes, you can go through this.

Ragu babu has some publication on forest cover

raomohaswar.com.jang.edu is the site for such study

Dr. Zaman and Dr. Gejo are good persons in this field