The International Children's Digital Library (ICDL) is the coolest. It offers a ton of children's books full text with some really intricate searching capabilities that I think many children would not know how to use (oh well). One innovative search capability involves choosing the book cover color, what is most interesting about the idea is that it is geared toward the way children search for books. They even have color coded buttons it offer the most graphic interface I think possible.
One problem that I see with the site is its huge size and quite complicated search interface. When you click to read the book it gives you a very small size to begin with. In order to change the size you have to scroll up and down (at least on my computer). This can be hard to do and it is possible to not even notice the top hand navigation.
Maybe if they made the bar accessible from both the top and the bottom of the screen this problem would be cleared up. Overall, this is a great resource for teachers and librarians alike. I don't know it anyubody has already mentioned it.