I prefer the model where my kids can get stories read to them by anyone.
Also I think you could have a hit with moms if you do an autoplay feature. Moms need 30 mins of time to get something done. Moms dont like it when their kids watch TV. Your app should allow a Mom to click play and then deliver 30 mins of books to the child, uninterrupted. IMHO if it's a high quality experience moms would pay for this.
I was thinking Jackanory style "programs" where authors read their own book or a voice actor reads. Indeed you could probably by rights for audio from the BBC, etc., or from Barefoot Books, say, and match up with the book. Very easy to establish a large catalogue of books then.
Another extension might be to offer a copy of the book with an audio-CD/mp3 of the person reading bundled with it.
I think there are so many variations possible (particularly in education sector) and that this idea will be in demand from children's publishers (licensing?) that you should do well with it.
Also I think you could have a hit with moms if you do an autoplay feature. Moms need 30 mins of time to get something done. Moms dont like it when their kids watch TV. Your app should allow a Mom to click play and then deliver 30 mins of books to the child, uninterrupted. IMHO if it's a high quality experience moms would pay for this.