You are all great! Thank you so much for all of the ideas!! I love the idea of making our own books, and I think I will try that. I definitely love reading to her and she knows that even when she can read on her own we will still have a lot of special reading time together. I would love to solve the problem by scooping her up and saying, "don't worry about it, you will read soon enough and right now I want to read to you" but the fact is that she wants to read on her own. I can not tell you how many times a day I hear, "Mama, I want read. Mama my turn."
Anyhow...I hear what you are all saying that phonetics might not be the best way for her to learn. I suppose I will just try my best to keep it fun and let my daughter lead the way, I just hope that she doesn't become too frustrated in the mean time.
THank you all again. I am going to reread all of your posts again!