Use some of your favorites, which will make them your kids favorites, too!  For read the pictures, pick a book that has very strong picture support.  A predictable book or fairy tale that kids know would be a good choice for retell the story--like "Brown Bear, Brown Bear" or "The Three Bears".  Find a story with text that can be easily decoded, like "Dan, the Flying Man" by Joy Cowley for read the words.  Try to avoid books that may be decodable, but the story makes no sense.