Originally Posted by Blackcat31:
While you may not want to read the same books over and over, there IS a developmental reason the kids want the same book over and over.
Reading a favorite book for the one hundredth time will actually help your child relate what he hears to the words and letters on the page. These are the beginning steps for many developmental milestones.
Children aren't equipped to "follow a story" like adults do. They have to piece together not only the environment (setting) but each character's role and place in the story.
They aren't yet able to follow too many sequences at one time and instead follow parts and pieces of the story EVERY TIME it's read and only AFTER the 1000'th time they've heard it do they begin to put the pieces together.
Instead of switching books I'd start changing up HOW you read the story. Ask the kids to "guess" what happens next. Skip a sentence or action and ask the kids what's different this time compared to the last time you read the book. After it's over, ask the questions such as what color Pete's groovy glasses were or what did Mama Llama say when baby Llama didn't want to got to bed..... etc...
Simply through exposure to print, older toddlers may begin to recognize very familiar signs, labels, and names. As you are reading let's say there is a stop sign in the story.... take a minute and point out the stop sign and say, “Look, it’s a stop sign. Cars have to stop. The sign says STOP!” Pretty soon, the children will recognize the sign and the word. Pointing out signs and other ways writing is used in the environment will help the kids begin to develop an understanding of the use of print and build a foundation for reading.
A story is SOOOOOO much more than the pictures on the page or even the story itself. 
That's what I've done with tutoring little kids. I'd use a story they like and have them help me read it and ask them questions about it as we go. They love being a part of the reading.