I'm going to recommend what I always recommend for electronics beginners:
Grob's "Basic Electronics" - http://highered.mcgraw-hill.com/sites/0072988215/information_center_view0/
Forrest M. Mims III's "Engineer's Mini-Notebooks" - http://www.forrestmims.org/
The first is basically an EE101 college/university level textbook. As you know, college level textbooks aren't cheap, and Grob's is no exception. However, you don't necessarily need the "latest and greatest" most recent edition. In your case, I would try to get one copy of the latest edition (because it has a CD-ROM or something with a lot of info on it - heck, there may be a PDF of the book on it, for all I know), then pick up a few copies of an older used edition. This book is well worth it; it starts out with "What is an electron" and moves on from there. Its formatting is clear, its well written, and there are end-of-chapter quizes/tests - just like a good textbook should have. If you can afford it/find it - you might want to get the educator's edition/version as well.
The "Engineer's Mini-Notebooks" are a series of small books (well, they used to be, when they were published by Radio Shack back in the 1980s - the current editions are are now found in larger books - research Mim's site, Amazon, etc) geared toward a variety of various electronic topics. One book is on nothing but schematics and symbols and how to read them. Another has stuff about logic circuits. There's one on sensors, and another on communications and RF (ie, how to build a radio, how to communicate over a light-beam, that kind of thing). There's one that dedicated to the 555 timer. The series is a great addition to anything else you find for the Arduino, as well as Grob's. He has also published a larger regular "book" of circuits, some are from the Mini-Notebooks, others are new for the book (I can't remember the exact name of the book right now) - try to find a copy of that as well (it was published earlier this decade).
Another good reference for general electronics (though it is UK/EU specific in their symbol notations - which is different from what you generally see here in the US - so be aware of this, and you might as well teach it alongside anyhow):
Electronics Club - http://www.kpsec.freeuk.com/
For the Arduino specifically - there are a number of free books out there; one of the best I have found was done by Earthshine Electronics in the UK (it is a companion to an Arduino learning-kit they sell):http://www.earthshineelectronics.com/10-arduino-starter-kit.html
(the thread that started it all?)
There's also this book (but you have to pay for it):http://www.makershed.com/ProductDetails.asp?ProductCode=9780596155513
Finally - one last "resource" (consider this a "fun time" resource, that will teach the basics behind logic circuits, as well as problem and puzzle solving):
Back in the day, when home computing was young, the company (which is still in business last I looked!) called "The Learning Company" published a series of computer-based logic-puzzle games. One of the most cherished of this series was called "Robot Odyssey":http://en.wikipedia.org/wiki/Robot_Odyssey
I won't give away too many details (just read the above article for more) - but I have to say that as a kid, on my TRS-80 Color Computer 2, it helped me to understand logic circuits (and logic puzzles) in a very complete and challenging (not to mention fun!) manner. While you might find it difficult to find a copy of the original today (though to be sure, they do exist out there as "abandonware" - if you have the hardware, or at least an emulator - there's nothing like running it as it originally was designed!) - it does exist in a "renewed" fashion:http://www.droidquest.com/
...I guess it helped and inspired more than one of us out there...
I hope this helps!