I'm still waiting for a decent Netflix-style ebook ebook subscription service here in the USA (24Symbols has yet to cross the pond, darnit), but if I had kids my choices would have grown by plus one today.
Bookboard came out of cover today. This startup, which was founded by a couple ex-Adobe folks, is going to be launching a public beta soon. They're going to offer access to 300 titles from various publishers including Charlesbridge, Illumination Arts, Orca, Twin Sisters, and Bubblegum Books.
Access is free at this time, but sometime next Spring they plan to start charging for a subscription. The current estimate for monthly subscriptions puts the prices at around $5 and $10, with the higher rate offering premium content. The publishers are going to be paid via on an incremental model based on the number of pages read.
I don't have an exhaustive list of services similar to Bookboard but I can think of several. Sesame Street offers a similar plan, and so does Reading Rainbow. And if you have an iPad, I'm sure you can find at least a half dozen similar services, some good and some bad.