DD had little tolerance for sitting through regular chapter books until I started reading the Ramona Quimby series. Then she was hooked, and I've read lots since then (Little House on the Prairie books, the Borrowers, Mrs. Piggle Wiggle...). As much as DD loves Henry and Mudge (which she can read on her own), she enjoys a more complex storyline.
I use the AR Bookfinder site (
http://www.arbookfind.com/default.aspx) to get a sense of a book's grade level. I don't know how accurate it is, but it's something. It's also a good site to find books by the same author, or in the same series.
eta: I mostly read the kids books that I enjoyed reading as a kid, and that they may not necessarily pick up on their own. But, sometimes we have a fail. I tried reading E. Nesbit's "The Railway Children" and we just couldn't get through it. DS asked me to quit reading Mary Poppins after the first chapter. I think in both cases the language was just a little too difficult for them.
