First of all, don't get enraged at us, book readers -- statistically, most people alive today know the story from the films. And Saruman's sad fate is so insignificant that it was omitted from the third film completely -- only those of you with the extended editions of the DVDs saw the deleted scene, and even that's only if you were able to take two consecutive weeks off work to watch them. He's the primary villain of the story (outside of Sauron himself, who never actually appears), and his death is handled like he decided he didn't want to come back for the third movie and the producers had to write him out (the truth is the opposite, but we'll get to that).
In the novel, after surviving wizards, cavalry, and tree monsters, Saruman is reduced to hustling with Hobbits in the Shire to survive. He is exiled by Frodo and then, out of nowhere, Saruman's abused henchman, Grima Wormtongue, finally snaps and just kills him in the middle of the street. No epic wizard battle, no dragon, no trembling of the Middle-earth as a great evil is purged. It isn't even this big fist-pumping moment of redemption for Wormtongue -- it's described like this: "With a snarl like a dog he sprang on Saruman's back, jerked his head back, cut his throat, and with a yell ran off down the lane." That's it! Basically, Saruman gets put on ice by his evil intern, who then sprints away hooting like a madman.
New Line Cinema
"You told me this would lead to a salaried position!"
Tolkien handles it almost like an afterthought, coming just short of saying, "Oh yeah, Saruman died earlier. His carriage tipped over a few chapters ago and he smashed his head on a tree root or something."