I am by no means a reading expert, although I do like to read. And I've taught 2 of my 4 children to read - the 3rd taught himself when he was 4 so I'm not sure he counts in the total. Anyway.....
I have tried a number of reading programs/books and have finally found the ones I like best, the ones that work for my kids (all of them!) and the ones that are easiest for me to wrap my brain around.
1. Happy Phonics. This program contains mostly games. It follows a logical sequence and has a great little teacher's guide to help you understand which order to do things. My kids LOVE the games. Even after they have "graduated" from a game, they will go back years later and play them. The older boys are asking if they can play with the younger ones. Not only does the program work, the kids have good memories of it!
One of the things I like best is that because they are games, struggling readers are more willing to practice over and over. Reading (well, language in general) is very hard for one of my 10-yr-olds and Happy Phonics worked marvelously for him. We could go over the same sounds, in the game, over and over again and he wouldn't complain one little bit.
I did cut out and laminate all the cards so that the program would last longer...that took a while! But it has lasted for over 5 years now with one more boy to go.
2. Now I'm Reading Series by Nora Gaydos. These books work PERFECTLY with Happy Phonics. Each book focuses on a specific sound, or combination of them. The illustrations are fun and the text is silly. My boys love them and I don't mind hearing them read them over and over and over again.
I have used Levels 1, 2 and 3. By 3 a child could most likely start reading "easy readers" but Level 3 was specifically requested by my 6-yr-old so we're using them.
Each time the child reads a book they get to put a sticker in the front. Sadly, there are only 4 stickers per book and we've read them more than that. And now my youngest son won't have the coordinated stickers. I do wish you could order additional stickers.
The books (10 in a set) are kept in individual plastic sleeves, housed in a hardbound book. They are excellent for keeping all those small books together.
Updated to add: I love how the books build on words. For example, the first page might read, "A cat." The next page will be "A tan cat." The next will read "A tan cat sat." And it builds from there. It has really helped my boys with their confidence because they can read faster and they remember the words better.
I just read through Snack Attack with my 4-yr-old this morning and I noticed 2 of the books have characters that steal things and there is no remorse, repentance, punishment, nothing. Not so cool with that. I might have to go in and edit the book. Or pull them out. I haven't had that problem with the other books.
I'm working on a list of how Now I'm Reading correlates with Happy Phonics. I'll post that soon.
3. Starfall. It's an online program and it's free. I use this mainly when they are younger to help learn their letters and the sounds. As they progress there are some fun little videos and short games they can play. I consider this more of a supplement than an actual program, but it is well loved in this home.
4. Explode the Code workbooks. My kids will say they don't love these, but they do work. I wouldn't say this is "my favorite" but we keep using them because they have really helped them understand the language better.
And in case you are interested I tried the following without much success:
Teach Your Child to Read in 100 Easy Lessons
The Reading Lesson
various levels of Bob Books
Well, I should say we had success with one boy, and not much with the other. In every one of the above mentioned programs/books he hit a wall and couldn't get around it until Happy Phonics. I'm sure any of these books would have worked for the now 6-yr-old, but he heard us doing Happy Phonics so often that he learned to read on his own.