Sorry to hear your DD was so disapointed with her book, I can really see where she was coming from. When I am selecting book prizes for my class I take the time think about what there interests are etc. I try and select a hard cover non-fiction type book for my students as I would like to think they will be able to keep it and use it various times over their lives, but I always try and select something interest, for the age group I teach the girls are usually into animal, be it horuses or dogs etc, so will usually select something down those lines. For the boys it is usually soemthing like the ripley's believe it or not book, or ccars/ motorbikes, sport.
I can't believe her teacher doesnt know she can read chapter books- that screams to me ' what the hell is he doing when he is supposed to be teaching reading', or 'where is he during silent reading, or when they are selecting books from the library'.