Books are the best gift for any occasion as far as I'm concerned. If chosen correctly, they are the gift that never stops giving. And they show the recipient that the person giving them the book knows them well. Or wants to share something personal that they love with them. It's an intimate kind of gift if you do it right. Books as gifts epitomize 'it's the thought that counts.'
Picking books for young children can be tricky. There is a definite difference between what parents like (pretty illustrations, great story) and what children like (great characters and engaging language). There's nothing wrong with giving a PARENT a book to read for their child if you think they will enjoy it. And there's everything right about giving a child a book that will hopefully stay with them forever.