A Book of Sleep by Il Sung Na. Relatively new on the bedtime scene, this book is an instant classic. The illustrations are sublime. Period. 
Time for Bed by Mem Fox. This was the first, full price picture book I think I ever bought. And I bought it, interestingly for one of the same reasons that one reviewer on Amazon poo-poohed it: it's size. You can get this as a board book and a smaller paperback, but I bought the large book edition. I loved the idea of having such large, lovely illustrations totally fill in a child's line of vision before bedtime. Now, it's not so big as to be awkward and unwieldy... it's just a nice, jumbo size book. Many sleep books aren't.
Sailor Song by Nancy Jewell. I chose this for pure nostalgia's sake. I read it often to my firstborn when his papa was overseas; it is a homecoming bedtime tale. Sweet and soft. The illustrations are done by Stefano Vitale, whose work I admire very much.
Night Knight by Davey Owen. Just found and discovered and loved a few weeks ago. You can read more about that here.
It's Time to Sleep, My Love by Eric Metaxes. The rhyming on this is very much like Time for Bed. The artwork is surreal. There are elements of it that appear strange or eerie in a lovely, only-half-awake kind of way; my three year old daughter loves this one.
When the Wind Stops by Charlotte Zolotow. "And where do clouds go when they move across the sky?" "To make shade somewhere else." So goes this classic, gorgeous question and answer discussion between a young lad and his mother. Stefano Vitale is featured again here in exquisite form. So it may or may not be a "must read" but if you do read it, When the Wind Stops is definitely a "must love."
Grandfather Twilight by Barbara Berger. The small pearl becomes the moon. A few, well placed words. I love Barbara Berger... and she does not disappoint with this one.
A Mouse Told His Mother by Bethany Roberts. Excellent bedtime banter here not too unlike Runaway Bunny. The art is detailed and wonderful and as it should, the adventures end with young mouse falling asleep.
If You're Afraid of the Dark Remember the Night Rainbow by Cooper Edens. Perfect for children and teens and adults; this book was given to me on my 15th birthday and I treasure it's strange, lovely quirkiness still.
Goodnight Moon by Margaret Wise Brown. Did you really think I'd forget this? As one of the bestselling children's books of all time, even non-discerning parents often have this on their shelves. Their seems to be an unspoken code that this is a mandatory title. I held out for a long time just because things this popular spark the 'go against the grain rebel' in me. But eventually, I caved and like so many others, can recite it practically by heart now. That makes me happy.
“Stories make us more alive, more human, more courageous, more loving.”
-Madeleine L'Engle
(not to be confused with the fun little homonym book: 
