I picked up a book called Peter Rabbit - Tell a Tiny Tale from the library last weekend, and found it extremely useful to tell tales to my toddler. A Penguin Group publication, this book uses characters from The Tales of Peter Rabbit authored by Beatrix Potter.
Each section takes one character such as, say, Peter Rabbit, and asks four simple questions related to that character, such as 'where does he live', 'what does he eat', 'whom does he play with', 'who chases him', etc. There are three pictorial answers to each question. You can mix-and-match these questions and answers and tell a story to your child. For example, you could say... "This morning, Peter Rabbit woke up early and got out of his home in the tree. He bathed at the pond and played with the duckies. Then, he went to grandpa's garden where he found some carrots to eat. The cat didn't like this and came chasing him. Just then, grandpa came out and saved Peter Rabbit from the cat."
In the process of entertaining and kindling the child's imagination, such an exercise actually peps up our grey cells too. It is amazing how many tiny tales you can make up with those simple questions and pictures! You are sure to recall (and thank) the mathematics teacher who taught you permutations and combinations in class 10!