In the Noble Qur'an, in chapter 28 by the name of Al-Qasas (Narratives / Stories), which itself is proof that man is in need of narratives and stories. So it is clear that kids need to listen the stories. Best option for story telling may be choice of prophet stories as there is a lot of learn from it.
In many places in the same Noble Qur'an, stories of Prophets, kings and nations have been mentioned. Prophet Younus, a great Prophet sent to the people of Nineveh (which was a city where the modern-day Iraqi city of Mosul is). Prophet Prophet Yunus/Jonah (pbuh) is also addressed by two other surnames * "Sahibil-Hot" (Companion of the Fish).
Story of Prophet Younus (PBUH) for kids:
Prophet Yunus (alayhis salam) was sent by Allah to a big town where the people had forgotten Allah (Subhanahu wa Ta'ala)'s orders and did many things which Allah had forbidden.
"You should believe only in Allah and obey only Him", Yunus (alayhis salam) told them. "You should worship Him alone and do good, otherwise a severe punishment will come upon you!"
But Yunus (alayhis salam) soon discovered that the people did not want to listen to him. He lost patience with them and left the town in anger. Afterwards, Yunus (alayhis salam) decided to go across the sea, and boarded a ship for the voyage. But when the ship was in the middle of the ocean, Yunus (alayhis salam) suffered a great misfortune.
He was thrown overboard and swallowed up by an enormous fish!.
Fortunately, though, the fish had swallowed Yunus (alayhis salam) in one big gulp, so he landed in its stomach unhurt. It was very dark inside the fish's stomach, and Yunus (alayhis salam) grew very fearful. In his loneliness, he started to think over what had happened in the town, and came to realize that he should not have acted so hastily and in such a quick-tempered manner. Poor Yunus (alayhis salam)was in a terrible state! He lay on the shore, weak, ill and helpless. He felt dreadfully miserable, but Allah caused a tree to grow and this tree provided Yunus (alayhis salam) with shade and nourishing fruits, alhamdulilah. Before long, Yunus (alayhis salam) had recovered his health and strength.
When he was better, Allah sent Yunus (alayhis salam) back to the town. This time, though, the people there listened to Yunus (alayhis salam) when he told them: "You should believe in Allah and worship Him alone.
You must do good."
Related: http://www.oocities.org/mutmainaa/kids/story/yunus.html
Watch YouTube story of Prophet Younus (pbuh) according to Quran Narration:
One of the distinguished feats of the Noble Qur'an is this very story of Prophet Yusuf (as), which it refers to as the 'best of the narratives', and at the end of which, it says: In these stories there is a lesson for those, who desire to take a moral and adopt the path of the Perfect Men.
* You can find prophet stories in simple language to tell to kids at many sites like:
* 'Help for convert.net'
* 'The islamic bulletin'
* Story of Prophet Yunus/Jonah (pbuh)
Story of Prophet Jonah in Bible