I wouldn't worry yet, I'd just file that info in the back of my mind. What you have now is a known weak area as well as a known way around it (word problem). It may be that he just isn't into abstracts yet and it might come all of a sudden. Most schools use manipulatives and counting in K so he should do well with that. And hopefully he'll be able to move more abstract when the rest of the kids do.
I completely agree with MON. He's 5, and for math, there is a developmental time line. What's intriguing is that your son is able to handle word problems, which means that his conceptual understanding is solid and is arguably, ahead of the curve. I would go on with practicing in the way he likes best, ie, doing fun word problems. Perhaps the imagery is providing a context for him to visualize that standalone math facts can't?
FWIW, at age 5, I remember my son couldn't count past 17 sequentially either, but he'd know things like 15-7 or 18+3 for math games. We never drilled for math facts, so it was startling. I just skipped the counting thing altogether (probably out of ignorance on my part!) in the belief that kids will eventually put it together. Luckily he did. Till now, he has problems with sequential information, so I'm trying to teach him to have some sequential habits.
