Here's one for the babies: Phonics Training Ground is a cute little site for PK or K students. It starts off with showcasing certain letter sounds and blending together those sounds into words. Next students may be asked to identify the picture with a word and fill in the missing letter. Last, the officer in charge chants about letter substitution and makes new words. That's it - the site is very basic, but my PKer loves it!
Here are a few more early learner sites. Feel free to leave your favorites in the comments section!