I've been working through the Bob Books with Bethany (age 6) and Brooke (4) asked if she could start also. So, a few months back I had her start a phonics book, which I do with all the children when I teach them to read. We take a 3 ring notebook with page protectors and 13 sheets of paper. I print off each letter of the alphabet on a separate sheet and stick them back to back in the sheet protectors. I got the letter print offs from www.hubbardscupboard.org. Then we take magazine cutouts, one for each sound the letter makes and paste them onto the letter sheets. We go over these periodically and then once they've grasped all the sounds then we move on to the Bob Books. I bought all five sets when my oldest was learning to read because we like them so much. (I bought them at a book store with my educator discount.) I've found that after the Bob Books, they are ready to move on to Easy Readers of various levels.
So today Brooke asked me if she could read the Bob Books. She had tried maybe 4 months ago and just wasn't ready. Today she read through the first three and did great. She was very excited and I was excited for her.
Also, I found that the Spelling to Write and Read Curriculum, I think available through www.rainbowresource.com has these great flash cards with 72 phonics sounds and blends. These are practically all of the sounds that english letters and letter combinations can make. Although we didn't stick with this particular curriculum, the kids have really benefited form using the flash cards.