Rereading favorite books can get old for the adults, but it helps young children develop important skills! They begin to understand the relationship of the pictures to the text, they develop better comprehension of the story, they begin to "retell" the story themselves, and they enjoy it! It is, however, important to expose your child to new books as well. If your child always wants to read the same book, you can do first/then. "FIRST we will read this new book. THEN we will read Pete the Cat" (or whatever the favorite book is!).
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JTT wanted to be different and he sang Old MacDonald instead!