No one does illustrations like Chris Van Allsburg...

Of course everyone has read The Polar Expressand seen the movie, but in my experience, one of the favorite read-alouds for kids is The Garden of Abdul Gasaziwhich is both written and illustrated by Van Allsburg. In this book, a little boy goes out for a walk with an ill-behaved dog he is taking care of for the day. The dog runs away, past the "no dogs allowed" signs, and they meet a sinister magician, Abdul Gasazi. He is angered by the dog's trespassing in his garden, and turns the dog into a duck...or does he? The surprise ending has the kids gasping. Like Gasazi The Wreck of the Zephyris a creepy fantasy with a surprise ending that takes a little while to figure out. In it, a boy is proud of his sailing ability and, against everyone's advice, sails out into a storm. He finds a magical island where people have learned to sail their boats up into the air. He learns a little of the technique and heads for home, only to meet with disaster.
Oh, and Jumanjiis yet another example of why you should ALWAYS read the book as well as see the movie. It's so interesting for kids to compare and contrast the two.
Many of the best teachers I know use The Mysteries of Harris Burdickto do creative writing with their students. This book begins with a fictional introduction, in which a man drops off a package of illustrations with a publisher, and then is never seen again. These pictures are downright weird. In one, a man tries to hit a moving lump under a carpet. In another, a boy is skipping a stone on a pond, and the stone boomerangs back to him. Yet another shows a woman holding a knife over a pumpkin, and as the knife nears the pumpkin, it begins to glow. There is a portfolio edition of this book, which has large copies of the illustrations ready to frame, and the Internet is full of lesson plans to go with it.