I had this book as a child, I remember it came with a cassette of the story, had a lilac cover, and I think was part of a series.
It was about a girl who travels to a magical land made of fabric and she meets a little lamb (think it was made from calico). They become friends and she somehow becomes a giant. The lamb gets trapped in a mine and she's too big to get inside and rescue him. She gets small again (by crying?) and rescues her friend. The message was about it not mattering if you're only small or something like that.
DD has been asking me about books I liked when I was her age so I want to track down a copy for her but can't remember the flipping title!