When we went to London a few weeks ago for the Olympics my daughter found The Gruffalo book and a stuffed animal to bring back as a souvenir for my son. They saw the puppet show of The Gruffalo story, by Julia Donaldson, at Hamleys toy shop in London.
The Gruffalo looks very silly and almost scary but my son adores it and sleeps with it every night and asks me to read the book over and over.
He giggles at the storyline where a mouse tricks several other animals not to eat him because he is friends with a (mythical) Gruffalo, but then a real Gruffalo shows up and the mouse has to trick him too. I especially like how it points out all the parts of the Gruffalo (orange eyes, black tongue, green wart on nose, purple spikey back and more) so my son can point to all those spots as we read the story.
Apparently this book is very popular, especially in the U.K. and there is even a DVD of it. You can also find it in American bookstores or online at Amazon.