My smallest is in pre-school and I am starting to teach him to read. I am using the Puddle Lane set of books, which have proved popular with several small children I have known.
The set consists of 54 reading books, graded from absolute beginner to about grade 2. The characters and stories develop throughout the series. The books are designed so that there is a story that you read the child to grab their interest, and then a summary story that you can help them to read to you. The stories are engaging and imaginitive. The characters include a magician, a dragon, talking cats, mice who wear clothes and a variety of silly and sensible humans. The final stage of the scheme is a long adventure story, like a scaled-down version of the Hobbit. There are also songs in some of the story books.
I thought these books were long out of print, but I notice that Amazon is selling them: http://www.amazon.co.uk/Complete-Ladybird-Readers-Reading-Programme/dp/B0014E62QC/ref=sr_1_3?ie=UTF8&s=books&qid=1272963053&sr=8-3.
As they have been around for 30 years there are many second hand copies around. Sometimes people sell sets on eBay. Try not to pay more than £1 a copy.
If they weren’t in copyright I would put them all on LingQ and record the stories! I think they would work well for adults learning English. As it is, I think from time to time of writing a dodo-flavoured version for LingQ.