Well I'm actually taking a college course on children's literature! (I'm minoring in English.) Some of the books for younger kids that we discussed were:
Where the Wild Things Are (Sendak)
Snowy Day (Keats)
Ira Sleeps Over (Waber)
One Fish, Two Fish (or any Dr. Suess book)
Make Way for Ducklings (McClosky)--which is an old favorite of mine.
Also anything by Roald Dahl, although some of them may be better for kids older than 3rd grade.
My professor also recommended "The Read-Aloud Handbook" by Trelease.