I applaud the library's stance that the books are no worse than romance novels. While I am sure the content is as erotic as you would expect a Penthouse publication to be, similar content can be found in the writings of, among others, the Marquis de Sade, Anais Nin, and Anne Rice, who has written erotic novels under the nom de plumes of A.N. Roquelaure and Anne Rampling. And yes, works by all of these writers can be found at the library.
Anne Rice's books have been banned from libraries before, and in response she has said, "Censorship is foolish." I couldn't agree more, Anne.