A really fun phonics program that works is Frontline Phonics. It has a cd of letter songs, 2 sets of flashcards, a couple of simple workbooks (there's no writing except for lines at the top of 1 sheet per letter for writing the letter), a "coaching manual", a how-to video for parents, little letter pieces with pictures on them (bad description, sorry!) and 53 readers. It's a bit pricey ($250 w/free shipping), but it's fun, the kids like it and it works.
The first letters that are taught are M, A, S, & T, then a blending lesson, then H & G, then you introduce the first reader. The readers are in full color and are a little bigger then Bob Books (and my kids found them much more interesting.) They like the letter songs and ask to listen to them frequently.
The workbooks are meant to be written in, but page protectors and wipe-off markers can preserve them if you have younger children.
This was the very first "school thing" I bought and that was before I knew about all the different programs out there. My daughter was very young at the time and wanted desperately to read, but I needed a lot of hand holding then. This program worked very well for us.
http://www.frontlinephonics.com/
You can get 6 free lessons here: http://www.frontlinephonics.com/free_lessons.asp
However, I have not done this and I'm not sure exactly what lessons these are.