Freddie's Blanket by Joanna Johnson
I know she's written more books, but this is the one I've read the most. Have you ever noticed how three-year-olds fall totally in love with certain books, and make you read them until you've memorized them? Yeah, we've done that with Freddie's Blanket, most recently. In addition to a charming story about a lovingly hand-knitted blanket, there are knitting patterns at the end, for the blanket and swaddle illustrated in the story, as well as a stuffie of Freddie and his sister. Very appealing for knitty families like mine! Johnson has also designed many other knits; you can check them out here.
Milo Armadillo by Jan Fearnley
Super cute story about a homely and lovable armadillo knitted from scraps, and as a bonus knitted and crocheted fabric makes up
Knit Together by Angela Dominguez
As a mother, I very much look forward to the day when my daughter will be ready to learn to knit. She really wants to learn, but she doesn't quite have the attention span required. She will soon, I think, and the fact that she keeps asking me to teach her, and grabs my yarn and pretends to knit, just warms my heart. In this book, a mother and daughter collaborate on a knitting project because as much as the daughter wants to knit, she isn't finding success. The daughter draws and the mother knits and together, they make something beautiful. Not the most knitterly of books, but it has a special sentimental meaning for me.
Don't Slam The Door by Dori Chaconas
A knotty pair of socks is in the process of being knitted in this story, and Chaconas has a wonderfully poetic ear. It usually takes me a few reads of her books before I feel I can really do justice to the rhythms in her stories -- they're that sophisticated.
Annie Hoot and the Knitting Extravaganza by Holly Clifton-Brown
The bright, cheery illustrations really make this story about an owl that knits and knits and knits, including some very unorthodox things (hot-air balloon, sailboat, parachute...). And I found myself trying to figure out whether I can turn some of Annie Hoot's many colourwork patterns into real stitches.