Make sure you choose traditional tales that address the concerns and interests of small children. The right folktales make for wonderful telling. They deal with what it is to be human and, in the process of being passed down orally from one generation to the next, they have been pared down to their luminous essence. While some find modern literary stories for children tell well, many do not. Folktales are probably a better place to start until you develop a sense of what sort of language and plot work in telling.
Some people feel that the traditional nursery tales are too harsh or violent for small children.
Bruno Bettelheim says that children's strong sense of justice is satisfied by the sometimes harsh endings of folktales, in which punishment is meted out only to those who deserve it, never to the innocent. In my experience, these tales are not troubling to most children three years of age and older. However, when I am telling, I watch carefully and if something is frightening to a child, I moderate the mood with my voice. This has rarely happened. Most often, children relish the triumph of the little over the big.