When they came along, the moviemakers took a great deal of artistic license. Little of the book remains intact in the movie. The book starts with Shrek's parents hissing things over, and they decide to send Shrek "out in the world [to do] his share of damage". Shortly after he leaves home, Shrek meets with a witch who tells him his fortune in exchange for a few of Shrek's lice. Shrek is told that he will wed a princess who is even uglier than he, and is overjoyed at the news. On his way to the princess, Shrek meets a peasant, confronts thunder and lightning, defeats a dragon, has a nightmare of being loved by children, and meets a donkey who takes him to the castle. After defeating a knight he goes and meets his princess. The two get married and live horribly ever after.
The story is well told, and I love how Shrek breaks out in rhyme at the sight of his princess. The words flow well, and the book is fun to read out loud.
The illustrations of Shrek are, by necessity, ugly. Even more so than the movie. That said, they are also cute, though not in the huggable/loveable sense. The illustrations are colorful, fun, and expressive. A great book, even if (or especially since?) it isn't the movie.