Imagine this scenario:
Your first child is a precocious kid. She asks you to read aloud books like The Secret Garden or House at Pooh Corner when she's barely four years old... She seriously takes off in second grade, and by third grade she's devouring Harry Potter (all of them that were printed by that date, anyway) and anything else she can get her hands on... nothing is too difficult, too obscure, or too big for her.
Then along comes your second child... She learns to read faster than her older sister (different school system), and is also able to read Junie B. Jones and The Magic Treehouse books (as well as Clementine) by the end of first grade. And then... she stalls. Second grade, third grade go by and she really shows no sign of being interested in longer books. That's not exactly accurate: she has discovered that she loves having longer books read aloud to her: Matilda, the Ranger's Apprentice, Sisters Grimm and so on. But, she shows no sign of desiring to read ahead in the book (unlike her sister), to pick up the book on her own after you close it every night.
Melissa at Book Nut has a great article on strategies for helping kids jump that reading gap that sometimes appears in 2nd or 3rd grade:
1. Find a genre that your child is interested in. ...when I'm at the library, I pick up a few picture books with longer stories that I know C will pick up and read. Fairy and folk tales, books about girls her own age (Moxy Maxwell or Bobby Versus Girls, Accidentally), and general non-fiction, are also all things that she likes.
2. Try Graphic Novels. This was the big winner in our house. Graphic novels like Babymouse and Diary of a Wimpy Kid, or Dork Diaries and Ellie McDoodle, bridged the gap between early chapter books and more difficult middle grade books for C.
3. Don't push it. You know the saying "at least they're reading"? Think about that. Reading is not supposed to be a chore, it's supposed to be fun. And if they LOVE reading Magic Treehouse (even though you think it's crap), then let them read Magic Treehouse...
4. Have someone else -- a librarian, a friend, a teacher -- suggest books. Sometimes, the reason your child isn't progressing is because it's coming from you, the parent. (Sad, but true.) ... Included in this are fads, which are not always bad. Perhaps part of the reason M read Harry Potter was because everyone around her was reading Harry Potter. Likewise, C willingly reads and loves the Percy Jackson books because they're popular right now.
5. In that same vein, try a parent-child book group. I'm not going to go into details, but rather send you over to Imagination Soup for some great ideas and reasons why this works, and works well.
Oh, and 6. Keep trying. Just because they don't love Saffy's Angel right now, doesn't mean they won't love it later. (We handed the book to her at the end of third grade; she could have read it because she read well enough. But she didn't actually read the book until a month ago, and started it only because she couldn't find anything else to read. She did like it, in the end.) Time and patience, as with everything, is the key.