I recently checked out "The Illustrated Wee Free Men" by Terry Pratchett from my local library (if given a choice between illustrated or not, I will always take the pretty picture option...it just slows down my reading a bit) and I am really impressed by the illustrator, Stephen Player. Most of his illustrations in the book are watercolor, which is a medium that frequently infuriates me, and he evokes color, texture and contrasting light and shadow for a masterful depiction of fantastical themes. Not to mention his amazing character sketches as exemplified by the tiny but fiesty Nac McFeegles above. I am currently wishing I had this kind of talent!
You can check out his portfolio at his website: http://www.playergallery.com