I attended WIFYR (Writers and Illustrators for Young Readers) this past summer and was able to learn from Trudy Harris many wonderful things about writing children's books. I received a copy of another author's story formatted the proper way to send publishers. I followed it's format, and thought I'd share mine with you.
Illustrations notes belong in brackets [ ] and are to say only as much as needed. Do not go into full detail about what you want it to look like, (hair color, setting, how many trees, etc) unless it's important for the story to make sense. The illustrator needs freedom and room to do their master creative work. Their job is to enrich the telling of your story even more, if if they're good, will add even more to it than what is written. (for example, I will have a little lizard doing random things that isn't in the written story at all) Because in this case, I am the illustrator, I was free to include even more detail here than may have been necessary otherwise.
Standard children's books have 32 pages (it's true... go pick some up and start counting pages) and usually don't begin until page 4, so plan it all out from page to page.
Hope this helps!
Please comment if you have questions.
Also, this is the latest revision of my story. I'm still open to feedback and suggestion for editing, because there are still a couple places that bother me a bit... rhyming is harder than you think!
Feel free to follow by email in the link on the upper right of my blog so you can keep up with the process!