We do this. I just go to Shutterfly and use all of our old pictures with characters to make a new book. One page per character or set. Make sure to leave a little room for those you dont have pictures of.
We always get people asking to see the books and the characters make a big deal about seeing their picture. I even had a CM take it back to the break room this time to get a signature for us.
I do the smaller square size and I have done both hard back and paper. Paper is easier for me and hardback is easier for the characters.