My kids both learned the letter sounds first. But mostly they don't sound out words, the letters seem to be clues that help them infer the right word from context. I think this is true because they can read complicated words in context that they stumble over in isolation. DS can also read Spanish even though he doesn't speak more than a few words of it. His pronunciation is excellent--I think he picked it up at preschool from one of the teachers' aides.
I think phonics is of limited use in English because of all the exceptions. Adults don't read by phonics anyway. We read by word recognition.
You may have seen this before:
I cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. The phaonmneal pweor of the hmuan mnid, aoccdrnig to a rscheearch at Cmabrigde Uinervtisy, it deosn't mttaer in waht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it wouthit a porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Amzanig huh? yaeh and I awlyas tghuhot slpeling was ipmorantt!
DD9 can read that passage fluently and easily. She is clearly not using phonics to do so.
