My absolute favorite read aloud book is "
Bark, George!
" It's perfect for this age - about the right length, funny, with a surprise at the end.
It's a cute story with great illustrations about a puppy who doesn't bark, but gives other animal noises. Its mom takes it to the vet and then the vet pulls out a cat, a pig, a duck and a horse. On the way home, mom wants to show George off, so she says "Bark, George" and George says "Hello!" - so you can get the kids to figure out who he swallowed.
A craft... Hmm.... You could have kids cut out and past the other animals inside a dog, you could have them make the animals out of toilet paper rolls and pipe cleaners, or you could have them draw a picture of what they think was inside George when he says "hello".
Another idea would be to make animal masks and then have the kids act out the story. You can make pretty easy animal masks by printing them off on paper and attaching string. You could do the same idea with popsicle stick puppets - print off the animals and then have them color them and tape them to popsicle sticks and then act out the story.