Josh really enjoyed The Paper Princess Finds Her Way by Elisa Kleven. We've read other books in this series and they always inspire him to make some creations of his own. I think Lyle still has a few Paper Princesses from last summer hanging up in his office.
You can download some free printable paper dolls from many places online, like Sarah Jane Studios. Small Magazine printed this in their online magazine, and I think it would be fun to make paper dolls featuring your own kids. Time to get more ink for the printer!