“A scientist in his laboratory is not a mere technician: he is also a child confronting natural phenomena that impress him as though they were fairy tales.”

in response to a mother who wanted her son to become a scientist and asked Einstein what reading material to give him
Found in Montana Libraries: Volumes 8-14 (1954), p. cxxx http://books.google.com/books?id=PpwaAAAAMAAJ&q=%22more+fairy+tales%22#search_anchor. The story is given as follows: "In the current New Mexico Library Bulletin, Elizabeth Margulis tells a story of a woman who was a personal friend of the late dean of scientists, Dr. Albert Einstein. Motivated partly by her admiration for him, she held hopes that her son might become a scientist. One day she asked Dr. Einstein's advice about the kind of reading that would best prepare the child for this career. To her surprise, the scientist recommended 'Fairy tales and more fairy tales.' The mother protested that she was really serious about this and she wanted a serious answer; but Dr. Einstein persisted, adding that creative imagination is the essential element in the intellectual equipment of the true scientist, and that fairy tales are the childhood stimulus to this quality." However, it is unclear from this description whether Margulis heard this story personally from the woman who had supposedly had this discussion with Einstein, and the relevant issue of the New Mexico Library Bulletin does not appear to be online.
Disputed
Variant: "First, give him fairy tales; second, give him fairy tales, and third, give him fairy tales!" Found in The Wilson Library Bulletin, Vol. 37 from 1962, which says on p. 678 http://books.google.com/books?id=KfQOAQAAMAAJ&q=einstein#search_anchor that this quote was reported by "Doris Gates, writer and children's librarian".
Variant: "Fairy tales ... More fairy tales ... Even more fairy tales". Found in Breaking the Magic Spell: Radical Theories of Folk and Fairy Tales by Jack Zipes (1979), p. 1 http://books.google.com/books?id=MxZFuahqzsMC&lpg=PP1&pg=PA1#v=onepage&q&f=false.
Variant: "If you want your children to be brilliant, tell them fairy tales. If you want them to be very brilliant, tell them even more fairy tales." Found in Chocolate for a Woman's Heart & Soul by Kay Allenbaugh (1998), p. 57 http://books.google.com/books?id=grrpJh7-CfcC&q=brilliant#search_anchor. This version can be found in Usenet posts from before 1998, like this one from 1995 http://groups.google.com/group/rec.music.beatles/msg/cec9a9fdf803b72b?hl=en.
Variant: "If you want your children to be intelligent, read them fairy tales. If you want them to be very intelligent, read them more fairy tales." Found in Mad, Bad and Dangerous?: The Scientist and the Cinema by Christopher Frayling (2005), p. 6 http://books.google.com/books?id=HjRYA3ELdG0C&lpg=PA6&dq=einstein%20%22want%20your%20children%20to%20be%20intelligent%22&pg=PA6#v=onepage&q=einstein%20%22want%20your%20children%20to%20be%20intelligent%22&f=false.
Variant: "If you want your children to be intelligent, read them fairy tales. If you want them to be more intelligent, read them more fairy tales." Found in Super joy English, Volume 8 by 佳音事業機構 (2006), p. 87 http://books.google.com/books?id=-HUBKzP8zsUC&lpg=PP1&pg=PA87#v=onepage&q&f=false

“A Fairy Tale and the End,” p. 40
The Sun Watches the Sun (1999), Sequence: "Forgotten Place”

The Historian's Craft, pg.26

Source: The Montessori Method (1912), Ch. 1 : A Critical Consideration of the New Pedagogy in its Relation to Modern Science, p. 8.
Context: We give the name scientist to the type of man who has felt experiment to be a means guiding him to search out the deep truth of life, to lift a veil from its fascinating secrets, and who, in this pursuit, has felt arising within him a love for the mysteries of nature, so passionate as to annihilate the thought of himself. The scientist is not the clever manipulator of instruments, he is the worshipper of nature and he bears the external symbols of his passion as does the follower of some religious order. To this body of real scientists belong those who, forgetting, like the Trappists of the Middle Ages, the world about them, live only in the laboratory, careless often in matters of food and dress because they no longer think of themselves; those who, through years of unwearied use of the microscope, become blind; those who in their scientific ardour inoculate themselves with tuberculosis germs; those who handle the excrement of cholera patients in their eagerness to learn the vehicle through which the diseases are transmitted; and those who, knowing that a certain chemical preparation may be an explosive, still persist in testing their theories at the risk of their lives. This is the spirit of the men of science, to whom nature freely reveals her secrets, crowning their labours with the glory of discovery.
There exists, then, the "spirit" of the scientist, a thing far above his mere "mechanical skill," and the scientist is at the height of his achievement when the spirit has triumphed over the mechanism. When he has reached this point, science will receive from him not only new revelations of nature, but philosophic syntheses of pure thought.

"Notice sur Halphen," Journal de l'École Polytechnique (Paris, 1890), 60ème cahier, p. 143. See also Tobias Dantzig, Henri Poincaré, Critic of Crisis: Reflections on His Universe of Discourse (1954) p. 8
Context: A scientist worthy of the name, above all a mathematician, experiences in his work the same impression as an artist; his pleasure is as great and of the same nature.... we work not only to obtain the positive results which, according to the profane, constitute our one and only affection, as to experience this esthetic emotion and to convey it to others who are capable of experiencing it.

Source: City of Glass

Source: Along for the Ride

Source: Girl at Sea

Source: Monstrous Regiment