There is some wonderful Arabic language literature and poetry but little is available in English. Only some of Mohd al Murr's short stories have been translated. However there is a lively children's literature scene in Dubai.
For poetry, there are scores of well known local (male) poets experimenting with classical Arabic poetry.
Arabs used to take extreme pride in their literature. They were amazing poets and they were known for this. This is why when the Quran came down to the Arabs through the Prophet, it was catering towards this. Ask any Arab they will tell you that it is a literary masterpiece and they cannot replicate its mastery and beauty. Of course when you translate it its not the same.
I too am a fan of Arabic literature.In fact I have read a lot of Arabic literature and short stories like those of Alibaba and 40 thiefs and magical lamp etc.There are a number of video games based on these stories.Other forms of Arabic literature is also excellent and rich in substance.
I haven't read any of it but am always surprised as to how we of different languages can still appreciate certain literature although we can't really understand it. You must understand that a lot of the beauty of it is lost when it is translated, it just doesn't do justice to it. So it is somewhat of a miracle that we are still able to appreciate it.