For finding books for young children, I prefer thrift stores. Usually you can get books for a quarter or two. You can also go to the library, but kids need to read books over and over again so it's good to have them on hand. You can also get books for them to grow into.
As the mother of a pre-schooler, I too am always on the hunt for good books. I second the Scholastic Warehouse as a great and inexpensive resource for, very often, some of the best and more current books.
The library is a hit and miss for me. Can't just go to the shelf and "browse" for good books amidst the thousands and thousands of books. Sadly, there are TONS of really bad pre-school books that I read once and want to write the author with a complaint letter (don't even get me started on children's lit and grammatical mistakes!).
Personally, I take recommendations from friends who are parents as often as possible. When someone runs into a book they (and their children) love, it is probably something good. Then, I try to find everything by that author.
If you are looking to purchase, it helps to be connected to groups of parents with preschoolers. Garage sales and book swaps are pretty popular among the stay-at-home moms!
When buying books for my own preschooler -- I always look at Usborne books first. I swear I am not associated with the company in any way, but I am a huge fan. There is a full website, but I can usually find a local "home sales" person to buy from. The books have incredible quality, especially from an educational point of view. For example, there is one group of books that have a "two story line" approach: for a really young child who doesn't have a lot of patience for a lot of words on a page the parent reads just the bottom text. As the child gets older and can handle more complex text, the parent reads the 2-3 lines of text at the top of the page. When the child learns to read THEY can handle the bottom of the page, and work their way up to the top of page. A very clever, thoughtful approach to creating books. There are books for all ages and interests.
We order a lot of our pre school things through a company called Lakeshore http://www.lakeshorelearning.com They have lots of things that are great for pre school age children. As mentioned above Scholastic is also a great source for books.
Outside of the local public library, the best source for preschool books is Scholastic, Inc. I receive great teaching magazines from that company for free. Though they charge for most material, the company does offer free samples, free resources on-line, and a few other free services that you can find if you go to the website at:
It is a well-established children's publishing company that can be easily overlooked. Almost everyone that I have talked to have said positive things about the company.
I work at a preschool and once a week we have a music teacher come in and conduct a music session followed by a story time. All of her books have come from our local public library and they are fantastic. I think its a matter of how engaging the reader is when it comes to picking the best book. If you love the book, you will read it in a way that the children love it too.
My choice as a parent and early childhood educator is the PUBLIC LIBRRARY. Books are free, current, and plentiful. If you find that you really want to buy some after a free library preview, my favorite source is Powell's Books in Portland. They buy & sell new and used. They will maintian a wish list for you of desired titles.