The Diggers By Margaret Wise Brown
I happened to randomly chose this book off the shelf at the Library and we have really been enjoying it. My son loves it since half the book ended up being about digging a hole under a mountian for a .... Wait for it......... TRAIN.
This book fit all my criteria for a good children's book. Great Pictures and an entertaining, short story to go along with it. I love finding children's books that I actually like to read and that my son loves just as much. This has been the best train book we have found.