I was a kid who LOOOVED to read and I can't bear to give books away, so I still have all of my childhood books. In fact, I occasionally re-read them since in really good books, there are many nuanaces that a child just will not grasp! I loved:
-ALL the Chronicles of Narnia (The Magician's Nephew; The Lion, the Witch and the Wardrobe; Prince Caspian; Voyage of the Dawn Treader (I'm actually reading this for the 100th time right now!); The Silver Chair; The Horse and His Boy and The Final Battle)
-Just about everything L.M. Montgomery ever did including the Anne of Green Gables series, the Emily series and her collections of short stories.
-Of course, everything Harry Potter!
-Peter Pan in Kensington Gardens and Peter and Wendy (which we now think of as "Peter Pan"). These were J.M. Barrie's original Peter Pan books and though they are nothing like the Disney version, they are completely charming and funny and IMHO, much better than any film adaption that has been made. Though Barrie wrote this as a play (primarily for children), I think both books have a special resonance for mothers (unfortunately, I'm not one yet!)
-ANYTHING by E. Nesbit (she is my favorite!)- an unconventional English author who does not often get mentioned in these kinds of lists, though many of the classic authors we do mention (specifically, C.S. Lewis and J.K. Rowling) acknowledge their debt to her

. She wrote around the late 1800's-early 1900's and most of her children's books focused on the adventures (sometimes magical, sometimes not) of different groups of children, often a group of siblings. If you're going to check her out, I suggest the books that deal with the Bastable children including "The Would-be-goods", "The Treasure-Seekers" and "The New Treasure-Seekers". I also like "Five Children and It" and "The Phoenix and the Carpet", but really, any of her books are good. Though her books are nearly 100 years old, they have a wit and humor which makes them seem as if they were written yesterday!
Sorry I got a little carried away, I just graduated from UPenn with an English B.A. and literature is my passion! I just noticed that most of the authors I mentioned are British and none are American! I have to say, though we have some good ones too- English children's literature blows American children's literature out of the water. I wonder why
But if you're looking for a fairly recent American children's book, I'd recommend "Changeling" by Delia Sherman. Really imaginative book and very funny. I actually had a chance to meet the author in one of my classes and she was just as entertaining as her book!