To be precise, "Die kleine Raupe Nimmersatt" doesn't translate to "The very hungry caterpillar". The English title is the original one, and the German one is a translation.
I'd say the translator allowed himself a certain degree of freedom, as it is common in literature. "Nimmersatt" is a nice word to express "very hungry" very concisely. In fact, it goes beyond "very hungry" and says "never satisfied", that is always hungry. The effect is augmented by using it as a name and not a simple adjective. As such, it has to come after "Raupe". "Die Raupe Nimmersatt", however, might sound a bit incomplete. By introducing "kleine", which has no direct equivalent in the English version, the translator could round it up and also match the rhythm of the original title.
Of course, most of this is interpretation. You'd need to ask the translator (or the publisher?) for a definite answer to "why?".