Research has shown that most children need some type of systematic phonics instruction. There are some really good phonics books available today. I recommend combining phonics books with easy reader books for children learning to read.Progressive Phonics - This site requires registration, but it's free. I registered and have not received any unwanted emails.
Starfall - You'll love this site! Be sure move your curser around the Learn to Read stories for fun animations.
Free Reading - Read a review of the program here.