There's a lot of research showing that rewarding people for doing things is a good way to put them off choosing to do those things - I think that's OK if everyone knows that the thing being rewarded isn't fun and wouldn't be done by choice, but needs to be done for some reason, but I really wouldn't reward reading!
Colinsmom, this perfectly describes why I resisted with a passion those "reading incentive" programs at my kids' school. (OK, really it was because I resented all the extra paperwork it created for me.) But, also, the idea that one would read 20 books in order to receive a free kid's meal or something just drove me nuts. I ultimately had to cave though in first grade because ds was very aware that other kids were getting prizes and he wasn't. And they were higher level prizes (baseball tickets, Six Flags tickets, etc.) that he started really being interested in. It still irks me, though, as it is at such odds with what I am trying to encourage at home.