Also, illustrations are such a huge part of the pre-chapter book crowd that I think paper books are better to show them off. Each book has different sizes, different types of papers, to emphasize the illustrations as opposed to viewing all of them on the same type of screen (computer or ereader). I've noticed that kids also really like to just push the buttons so they are less likely to mull over an illustration, so when reading an ebook, may turn the page a lot faster than they usually would when "studying" an illustration.
Obviously ereaders are great for reading all of the public domain classics once they hit the chapter books.
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