My son and I really dug the recent release of the iPad-ized Alice in Wonderland. After reviewing that application, I've been approached by any number of developers working on interactive e-Book titles. For the most part, these have been a disappointment -- providing the iPad equivalent of a "read along" book (the kind with a cassette or CD, and tones to turn the page) rather than showcasing any innovation.
I was really pleased, therefore, to stumble across this Bartleby preview. Under development by Monster Costume and Octopus Kite, and expected to release in July, Bartleby adds child-centric interactive elements to its eBook offerings, targeted at a 4-6 year demographic. As you can see in this preview video, buttons, sliders, and little puzzles expand an otherwise flat story-telling experience.