I was reading a children's book to my daughter about the bus system when I noticed a woman with no top on and a nipple showing amongst the illustration. Can I sue for indecency?

No! And where did you even get the idea this was viable?

What you should do is report the issue to the publisher.

Are you just trying to make money or are you trying to help the children? If you're trying to help children, contact the publisher and ask that the book be recalled. Then black out the offending area in your copy. If you're trying to make money, be aware that the publisher probably has a very good lawyer who will have no problem convincing a judge that 1) the artist, not the publisher was at fault since the publisher can't be expected to review every spec of every picture or 2) it was just a spot in the picture and it was your mind that made it look like something else.

... If you're trying to make money, be aware that the publisher probably has a very good lawyer who will have no problem convincing a judge that ...

It's not going to get that far. What OP describes is not against the law.