The Tale of Desperaux ; Being the Story of a Mouse, a Princess, Some Soup, and a Spool of Thread by Kate Di Camillo
This is only one of my favourite books; how can I choose a favourite child; it is impossible!
I would recommend this book to absolutely everyone - do you like passion, do you like adventure, love, humour, despair, it has it all. Buy it for your children, but read it for yourself. I did and never regretted it - its simplicity belies overwhelming feelings of emotion and insight in love, honour, hate and forgiveness, and little bit of soup thrown in for good luck.
Oh, and the kids will love it too.
Just found out it is going to be a movie - Don't wreck it is all I can say to them.