There are loads of excellent early chapter books as of late. Among them is the first in the new At the Heels of History series, Filigree’s Midnight Ride.
Browsing: Early Chapter
Princess Cora and the Crocodile, by Laura Amy Schlitz and Brian Floca, is great fun for younger readers, and is a bit of a cautionary tale for parents.
American Girl’s newest line of characters, WellieWishers, includes books and dolls geared toward 5-8-year-olds. But they work well for younger girls, too.