It's a wonderful thing when a child begins reading on their own. Having a kid who can read to themselves is life changing. Dagny was reading at 4 and ready for chapter books at 5, and what I learned back then as I was trying to find books for her is something that has become a mantra, "Just because you can read it, doesn't mean you should" There are many, many worthwhile books out there, and just as many that are complete junk. (Captain Underpants, anyone?) Some people think that it doesn't matter what a child reads as long as they are reading, and that has spawned a whole world of books that cater to that idea. I wholeheartedly disagree with that way of thinking, there are books that aren't worth reading, a kid is better off playing outside than reading a worthless book.
(Stepping of my soap box)
Some of the chapter books that my kids enjoyed were The Magic Treehouse books.
They are a combination of magical and educational, so you learn while being entertained. Along with a friend, I based an entire book club around the books when Dagny was 7 and Dane was 5. When we read about knights and castles we had a medieval feast, when we studied pirates we talked like pirates for a week and made hardtack. (it was gross) Studying Japan took us to the Japanese Tea Garden for a tea ceremony, ancient Greece brought the Olympic Games to our backyard. The books provided endless ideas for activities, field trips, and projects. (and snacks, snacks are big when you're dealing with a 5 year old boy)
learning about the first Thanksgiving through pie making