The Wall Street Journal has the best coverage of U.S. investment banking activity, so if you are going to read one newspaper, get the Journal. Most bankers say they read the Journal (which given their busy schedules, means they subscribe, let unread papers pile up in their office/cubicle for about a week and then throw them out). If you do have limited time, reading the front page and the Money and Investing section will get you almost all of the banking related news. The New York Times business section also has good deal coverage and the Financial Times (FT) is good for international banking news.
Beyond mainstream newspapers, the Daily Deal (www.thedeal.com) is read by many bankers. Bankers like to say they read the Economist to sound smart but few do. As far as the business magazines go (Forbes, Fortune, Business Week and the like), they are not very helpful when it comes to learning about investment banking.