I think leading by example is a great start. Now looking back, I realize that all my mom did was read, my aunt read, talked about literature and her shelves were draped with books of every kind. So that planted the seed early for me.
I have a niece who's not yet two, and since we don't have cable, she watches educational DVDs, plays, and trys to read books. Particularly the latter because that's what she sees me doing: reading or typing on the computer. So she emulates what she sees.
Apart from your children seeing you read, you can take them to the library and leave them to peruse books on their own, letting them find something that piques their interest. If they're not into traditional books, have them explore reading through an electronic device.