--Understand POD
Create Space uses a concept called print on demand (POD). This is where the book is printed only if it is requested for. POD let you self publish a book with a relatively low upfront cost (in the order of say $10 to $100). Before you proceed any further understand the difference between normal publishing and self-publishing. Below in the resource section is a link that compares both. Find out if self-publishing is right for you.
--Write a children's book
Select the age group. Look at the books written for those age groups. Usually preschool books have more pictures and fewer words. Words that rhyme are not important but it might be more fun.
If you are a fairly good artist you should be able to use a tool called 'pencil' to draw directly on computer. Here is a link on how to use that software http://www.ehow.com/how_5581915_draw-computer.html
Also note the page size requirements at Create Space before you go ahead with picture books. https://www.createspace.com/Products/Book/#content3 lists the possible page sizes.
Make sure you have at least 24 pages. There is a 'minimum number' page requirement at Create Space.
Get the book internally reviewed for typos and quality feedback. Remember that Create Space will not do this for you.
--Submit on Create Space
Once you have all the content submit it on create space. You will have to open a Create Space account. Go to https://www.createspace.com/Signup.jsp if you don't have an account. There are two things to submit. The inside book content and the cover. So far, the inside content is what you have. You can bundle up the inside content as a PDF. Note that you will need everything at 300 dpi or more. Read this article on how to create a PDF document from a word document (or any document) http://www.ehow.com/how_5830157_convert-pdf-using-pdf-printer.html
Attached is a screen shot of how to print to PDF and set the dpi setting.
For the cover specification, you should follow the instructions given in cover creator. This is probably where you might spend some time.
When you submit the book, you will be asked to decide on your share of the deal. I.e. how much do you want per sale of the book. Based on that, the actual price of the book is decided. You can make this book available as an e-book or a printed copy book or both. The price for printed copy book is much more. There are different pricing options based on 'standard' version or 'pro' version.
You can use this calculator to see how things will work out.
https://www.createspace.com/Products/Book/#content2
-- Review proof copy and go live.
Once you submit the copy, Create Space will let you know if there are issues in submission. This usually happens very fast and you can expect to get some email from them saying that the proof copy is ready for review. You will have to order the proof copy. This is the only time you need to pay. The cost of the copy is price of the book minus your royalty. Once you order the proof, the copy arrives at your home within a week. If you have issues with the proof you will have to correct it and repeat the process. Once you approve it is very soon made live and available on Create Space. It also gets to Amazon but that takes a 2 to 3 weeks.
-- Get initial feedback.
You can get reviews from other Create Space members. You should login to your account and click on the Manage Previews link on the left. Here is my books link
https://www.createspace.com/Preview/1059566 . The questions are up to you
-- See Inside on Amazon
After 2 to 3 weeks, you will finally see your copy on Amazon. Here is a book I published. http://www.amazon.com/I-like-Play-S-Nandan/dp/1448660637/ref=sr_1_1?ie=UTF8&s=books&qid=1263177310&sr=8-1 Notice the Click to look inside feature. This is something that Amazon provides for free but you will need to follow separate steps. http://www.amazon.com/gp/help/customer/display.html?nodeId=13685751
--Track your sales directly at Create Space