I think most of our favourites have already been mentioned!
I love reading the books I used to read when I was little:
Alfie and anything else by Shirley Hughes (esp Dogger)
The Tiger who came to Tea
Victor and Maria
The boy who was followed home (not quite as sinister as it sounds..)
Beatrix Potter (esp Mrs Tiggywinkle, Peter Rabbit, Jemima Puddleduck, Jeremy Fisher - we got a lovely box set of them all really cheap from The Book People before L was born!)
I love books that the kids resonate with-so ben has loved the alfie books and the Sarah garland ones are about real life activities like doing the washing or the gardening, but in a lovely way. Oh, and I like the way that both authors have pictures of untidy, realistic homes! It always makes me feel better 
Yes - this is exactly why Shirley Hughes is so popular with us too. L loves all the little details like saying exactly how Alfie and Annie Rose each get down the stairs in the morning (Alfie - forwards holding the bannister, Annie Rose - backwards, feet first). And the messy houses are great

Haven't read any Sarah Garland so must have a look for those.
We also have an old Usborne Childrens Encyclopedia which L likes dipping into on occasion. Some of the the technology stuff is quite out of date now(!), and of course lots of the book is beyond her for now, but she loves reading about the seasons, the life-cycle of the frog and things like that. I just pick something she might be interested in and we talk about it. She likes looking at the maps in there too and I tell her about the different places.