The full length novels of the Valkyrie Bestiary should be read in order because there are definite character and story arcs to follow. The shorter novellas and novelettes add details to Kyra's backstory, and don't need to be read in any order to be enjoyed. However, readers may appreciate the novellas more after being immersed in Kyra's world.  I would suggest reading books 1-3 before starting the prequels. Here's my suggested reading order:
 

1. Dragons Don't Eat Meat
2. Dervishes Don't Dance
3. Hell Hounds Don't Heel
4. Before Times (collection that includes Three Half Goats Gruff, The Girl Who Cried Banshee, The Last Door to Underhill)
5. Grimalkins Don't Purr
6. Kelpies Don't Fly
7. Ghouls Don't Scamper
8. Oh, Come All Ye Dragons (novella)
9. Devils Don't Lie
10. Tales from the Inbetween (Collection of outtakes, plus 1 short story)
11. Unicorns Don't Cry

If you're a purist and would prefer to read the stories in chronological order, this list is for you.
 

1. The Last Door to Underhill
2. The Girl Who Cried Banshee
3. Three Half Goats Gruff
4. Dragons Don't Eat Meat
5. Dervishes Don't Dance
6. Hell Hounds Don't Heel
7. Grimalkins Don't Purr
8. Kelpies Don't Fly
9. Ghouls Don't Scamper
10. Oh, Come All Ye Dragons
11. Devils Don't Lie
12. Unicorns Don't Cry

Tales from the Inbetween includes outtakes from books 1-7, plus a bonus short story that takes place before Book 7.