March's recommendation: Stardust, by Neil Gaiman.
As of the writing of this recommendation, I'm waiting to hear whether or not the American Folklore Society has accepted my paper proposal for their annual meeting. The paper in question is on Stardust -- specifically, on the ways in which it is like (and then unlike) a fairy tale.
The novel's a short one, as fairy-tale-like things tend to be. It begins in the town of Wall, somewhere in the southern half of England, which takes its name from the wall that stands on the eastern side of town. There is one opening in it, and day and night, without fail, two men of the town stand guard on it, to keep people from going through. This prohibition is suspended for one day and night every nine years, when the Faerie Market comes to the meadow just beyond the wall.
Most of the story, unsurprisingly, takes place in Faerie, after Tristran Thorne, a young man from Wall, makes a foolish promise to his lady-love that he will fetch her a star they see fall. It's a fairly catholic setup for a fairy tale; what's interesting is where Gaiman goes with it. For one thing, Tristran's not the only one seeking the star. So, too, are several brothers (for the star was knocked out of the sky by a thrown gem which is the Power of Stormhold, and whichever of them gets it will inherit their father's position as Lord of Stormhold); so, too, is a witch, who intends to cut out the star's heart and use it to return youth to herself and her two sisters. The star herself -- who turns out, to Tristran's surprise, to be a person -- isn't much inclined to help any of them, Tristran least of all.
The competing objectives of these characters make a more complex story than you would get in a fairy tale -- which, of course, helps make it a more satisfying novel. Fairy tales, delivered straight-up, tend to feel thin to modern readers. Most of the novel's fairy-tale qualities inhere in the logic of how the plot occurs: when Tristran does a good deed for someone he encounters on his travels, he gets repaid, sometimes with magical objects whose uses do not become apparent until later. (That's my off-the-cuff assessment, anyway. More complete analysis will have to come when I write the AFS paper.)
Gaiman's style isn't quite like a fairy tale in the Max Lüthi sense; Meredith Ann Pierce's Darkangel trilogy comes closer to that. But he strikes a good balance with the style he does use, whimsical without failing to take his own story seriously. Which is, in general, the way I think it should be done, unless you're out to write a parody. The only way to make the goofiness of a fairy tale work is to do it with a straight face.
Depending on what edition you read, you may also get the benefit of Charles Vess' lovely illustrations. He really does do Faerie (in the sort of classically folkloric, English sense) better than pretty much any other artist I can think of; others, primarily digital artists, may be able to pull off a certain flavor of otherworldliness better, but for something like this, Vess is perfect.
Having not read Anansi Boys yet, I think this may be my favorite of Gaiman's solo novels (leaving Good Omens aside as its own thing). Then again, I've always been a sucker for a well-told fairy tale.