Penrod, by Booth Tarkington.
The Year the Yankees Lost the Pennant, or any of the other funny, engaging novels by Douglass Wallop.
The Friendly Persuasion, by Jessamyn West. The book description makes it sound twee as all get-out, but it’s really not; it’s well-written and quietly funny. One of the chapters, “The Pacing Goose”, appeared in one of my textbooks in junior high as a stand-alone story (all the chapters work as stand-alone stories; makes it a good book to read out loud).
Another one I like is Let Us Consider One Another, by Josephine Lawrence. Written and published during WWII, it centers mainly around a young Catholic girl who marries a Jewish staff sergeant, and her family’s reaction to it, but there’s several side plots going as well with other characters, all of which are brought to quite satisfying conclusions.
I found both those books in a cache of dusty old tomes my mother has been hanging onto forever; they all belonged to either my grandmother or my great-grandfather. That’s also where I found Twenty Thousand Leagues Under the Sea and a falling apart copy of Tarzan of the Apes. I think Lady Chatterley’s Lover is in there too, but I haven’t read it.
The Return of the Twelves, by Pauline Clark. It’s an excellent story for children.
FaeriBeth–I loved Magic Elizabeth!
How about Rumer Godden’s* In This House of Brede*?
Almost anthing by E. (for Edith) Nesbit. I particularly like The Phoenix and the Carpet and The Railway Children.
Most of her stuff is available at Project Gutenberg for free.
The Portmanteau Book by Thomas Rockwell of How to Eat Fried Worms fame. It’s full of crazy, funny stories for kids around middle-school age. One story that sticks in my mind concerns a group of boys looking for a place to hang out and tell shaggy-dog stories, and it’s divided into sections called “Nakedness” (one boy gets locked out of the house naked as a practical joke) “Toilet Paper” (another boy is trapped in the girls’ bathroom), “Underwear” (a sci-fi story in which aliens take over the world, disable all technology, and force everyone to walk around in their underwear) and “Love” (the boys disrupt someone’s sister’s play rehearsal). The sheer puerile, concerned-parent-baiting fun of these stories ensures this book will stay out of print for awhile. I just hope someone finds it in their heart to reprint it by the time the Princess is in middle school; I just know she’ll love it.
Pretty much anything by Tim Powers, especially Last Call and The Anubis Gates. They’re old faves; I guess I read Last Call at least once every couple of years.
“The Egg and I”, or anything else by Betty MacDonald is well worth a read. She had an ability to make even the most mundane circumstances seem hysterically funny. Even her childrens books are worth reading by adults. Her sister’s book, “Anybody Can Do Anything” is great too.
Archergal writes:
> Almost anthing by E. (for Edith) Nesbit.
Why Nesbit isn’t as well known as J. K. Rowling is beyond me. Nesbit is clearly the most influential author of children’s fantasy of the past century and a half. (Yes, even more influential than Lewis Carroll, although he’s somewhat the better writer, but it’s just too hard to imitate him.) She’s not unknown, and most of her stuff is in print, but it ought to be better known. Start with her series Five Children and It, The Phoenix and the Carpet, and The Story of the Amulet.
One of the few good children’s books in the style of Carroll is The Magic Pudding by Norman Lindsay.
Conversations with God, Neil Walsh.
This is arguably my favorite book ever, a position it’s held through decades and countless rereadings.
Just in case you don’t already know (and to plug the books, which I try to do at every opportunity), Godstalk is the beginning of a series, even though its own story is largely self-contained. It’s followed by Dark of the Moon, Seeker’s Mask, and To Ride a Rathorn (which just came out last year), all of which are worthy successors. Dark of the Moon is probably the weakest of the lot–fortunately, it’s now available in an omnibus edition along with Godstalk. The series isn’t complete yet, either. Hopefully, the next book will come along a bit more quickly.
The anthology Blood and Ivory offers more Jame stories, some of which aren’t precisely canonical, and one of which happens square in the middle of Godstalk and was trimmed from the novel. It also has an exceptionally good Sherlock Holmes story, of all things.
Okay, Hodgell hijack over. 
If you want thought-provoking and symbolic, pick up “The Handmaid’s Tale” by Margaret Atwood. It’s a short read, a little depressing (it’s dystopian) but ultimately empowering.
For Victorian values, romance, plot twists, and a very satisfying ending, pick up Charlotte Bronte’s “Jane Eyre.”
For light-hearted entertainment that will later make you go, “Hmmmmm…” get a copy of John Kennedey Toole’s “A Confederacy of Dunces.”
These are all part of the English language literary canon (Toole was American, Atwood is Canadian and Bronte, of course, was English) and should be in any well-stocked bookcase.
Sunrazor, I don’t think I’d call any of those choices “forgotten” books.
Ever since I learned about this book on the SDMB, I’ve been plugging it at every opportunity: New Grub Street by George Gissing.
So interesting and well-written.
Also, I can never say enough good things about The Brothers K by David James Duncan, which isn’t nearly as old but is at least as wonderful.
I loved this book. And, if you read the Wikipedia article on it you’ll see that someone is trying to make a movie of it; at this point it looks like it’s merely reached the proposal and shopping around stage.
An old book that NOBODY knows is “Salt: Or, The Education of Griffith Adams”, a skewering of the American educational system around 1910, by Charles Norris (brother of Frank Norris who wrote McTeague). I don’t think it’s considered a terribly good novel, but its description of college life around 1910 was interesting, and at a later point when the protagonist goes to work in a large NYC office, we see something about how that worked, too. Eventually he gets fired, and the sequence leading up to that is described with remarkable starkness.
Speaking of college life, apparently classes (years) back then had weird fads of dress they were expected to follow; for example, all the seniors wearing plug hats. I know up to the 1940s, at Berkeley, juniors (I think) were supposed to wear the same pair of cords all year…WITHOUT WASHING!!!. And to think those very same guys ended up complaining about “dirty hippies” in the 1960s!
I think I might be misunderstanding the thread but I never miss a chance to think fondly of The Phantom Tollbooth.
I also would like to read the Madeline L’Engle books (A Wrinkle in Time, that one with the starfish, etc.) again sometime.
Five in a Tent by Victoria Furman (and amazon.com actually has it!). I loved this book when I was in 6th grade. It’s about a girls’ summer camp.
A Tree Grows in Brooklyn and Maggie Now by Betty Smith. Both are quirky, bittersweet novels.
you beat me to it. ‘a wrinkle in time’ was the first book i thought of when i read the op.
i have my childhood copy of it to this day.