For Grades 1 and 2, I have tried to alternate my daily story time between a realistic story (for example, Farmer Boy) and an imaginative story (for example, Flat Stanley). Aside from the daily noon story time (approximately 10 minutes), I also have a weekly Literary Class when all the students gather in the Reading Corner while I read a picture book. I use this time to try to introduce basic concepts such as story structure, author/illustrator, etc.
Another thing that I do for lower elementary is that I take photos of the illustrations and display them with my projector (not sure about the legality of it?) The children love it and it helps them stay engaged in stories while allowing me to read instead of walking around the classroom showing the pictures.