It looks like Toon Books is launching an application for the iPhone and iPod Touch:
Titles currently available are Jack and the Box by Pulitzer Prize-winning cartoonist Art Spiegelman and Little Mouse Gets Ready, a Theodor Seuss Geisel Award Honor book, by Jeff Smith.
This is a collaboration between TOON Books and iStoryTime, a publisher of children’s storybooks for the iPhone.
Electronic media are a big part of children's books' present and future, although I don't believe they can replace the physical books themselves. The pages of a book can be much easier on the eyes than a computer screen!