I suggest you: 1) "Il mago di Oz" 2) "Ulisse" of Paola Cataldo in this book there are also exercises 3) "Il piccolo principe" mentioned before

I search for children's books in Italian on ebay and have gotten some great ones at a good price. 

Try il piccolo principe, cuore, Pinocchio and il diario di gian burrasca for kids books, all free. Also easy to find them narrated as well.

For self help you can't go past Italiano automatico. Infact it is so good i believe it is main reason why I achieved fluency within a year. A  absolute must for any Italian learner.

I know it might be cheating and you are definitely not getting any Italian culture this way, but I found it easier to read books I already knew and liked (but maybe hadn't read in a while) and just get the Italian translation.  My Italian teacher still jokes that she'd never seen anyone learn an entire language by reading cheesy romance novels (called ''Harmony'' in Italy).  I'm not proud of this technique, but it sure did work!  And now you can get a lot of Italian translations via Amazon/Kindle, so no haunting used book stands like I used to.  

Thanks for your suggestions! So do you feel that the Italian trabslations of The Little Prince and The wizard of Oz are really good?