My daughter is a beginning reader, and both she and I have been less than thrilled with many of the books for her reading level. So many of them are seriously lacking either in the story or the art department and do not interest her in the least. We have found some materials that we both enjoy, however:
Starfall's Learn to Read - this is a fabulous free resource, with phonics-based stories for multiple levels of readers
Brand New Readers - there are a few of these fun, colorful books available online, and more might be at your library.
Mini books - these are small books, typically 8 pages, that you copy or print and assemble (one cut and a staple), and kids can color the pictures if desired. Scholastic has books of these that typically contain 25 stories, available from your favorite bookseller, and there are some available online. The advantage of these is that there are so many, they can be cycled, so that I can determine whether they are being read from the words or from memory.
A template for story paper is also useful for summer journaling. I printed a bunch of these and stapled them together, and by the time school starts, she'll have a book all about her own summer vacation.