Emily's Balloon, by Komako Sakai, is an old favorite that recently emerged from behind the bookshelf where it went unnoticed for the past year.
My mom bought this for Katherine before she was born, and my first thought was, "This story is sad!" I wasn't sure I wanted to read my children anything but beautiful, happy-ending books. But Katherine, and now Clara, love this book, and I have since changed my view on happy vs. not-so-perfectly-happy endings in children's literature.
Emily's Balloon is simply written, leaving plenty of space for a child to fill it in with his or her own thoughts. The artwork captures the joy of a young child with a beloved balloon.