So of course, I'm teaching Ellie phonics. My reason is very simple - they learn phonics at school. We also work a little bit on sight words, but not a ton. Ellie can read "Ellie," "mom," "dad," "Caroline," "up," and a few other random words.
Thanks to preschool and the flashcards I mentioned yesterday, Ellie has learned her letters and sounds (at least the short vowel sounds.)