Luckily, most traditional fairy stories do have princesses - or at least adequate princess substitutes - and so the book of Grimm has been added to the repertoire, together with Hans Christian Andersen. As a result, I have some sympathy with those parents who apparently refuse to read fairy stories to their children, on the grounds that they are too scary, and teach bad lessons. The first story I read my daughter was the Tinderbox, which starts with the cold-blooded murder of an old woman for requesting a bargain to be honoured, and ends with the whole-scale massacre of an entire court.
This should not, I feel, be treated as an unambiguously happy ending.
Nevertheless, there's a reason that these stories, and ones like them, have endured for so long - children still adore them. The language is super; the violence is sufficiently cartoonish and over-the-top that (I hope) it doesn't read across into every day life; and the length and complexity of the stories told are excellent for concentration spans and language development. The only downside is that when she was cross with me the other day, she said "No Daddy, be off with you!" like some Victorian grande dame.
No: I fundamentally disagree with sugar-coating fairy stories. They are both part of our heritage (even though, technically, they're mostly Scandinavian) and a whole sight more fun to read than bowdlerised, sanitised stories about nice people doing nice things. The only exception to this is the Little Mermaid. Our version of this one lacks the 'happy ending', and as a result is so unremittingly bleak and miserable that I can't read it. But then, that's for my own sake...