There were a few remarks in the press about this last June while the professor was in China with his daughter, mentioning that they planned to write a children's book together.
They seem to have made progress; amazon is now taking pre-orders for the book.George's Secret Key to the Universe (U.K.)
(to be published 6 September 2007)George's Secret Key to the Universe (U.S.)
(to be published in October 2007)
Currently more details are available at amazon UK than amazon US. The UK cover art reminds me of 1950s SF. (This is not a bad thing.) The U.K. site also has a synopsis.
The references to the Cosmos computer in the synopsis lead me to suspect that the book will involve the University of Cambridge's COSMOS project; Hawking is the principal investigator for that, the last I knew. The project runs simulations of the universe from shortly after the Big Bang to the present day "to test competing theories about how and why various structures - such as galaxies, stars, and planets - have formed". The quote comes from the best description of that project that I can find at the moment http://www.sgi.com/pdfs/3877.pdf
. The information is at SGI's website because they supplied the hardware.