My daughter was like that. She loved complicated plots, which weren't found in picture books, but chapter books made her nervous. I think they felt like too much of a commitment (even though we read chapter books to her at night). Finally, I got a chapter book on her Kindle and bribed her to finish it. It worked; she got over her fear and then started choosing more appropriate reading. The other thing about reading on Kindle that helped is we can enlarge the font, which makes reading easier for younger kids.