DD (6) is reading at a second grade level and I haven't done any formal phonics instruction with her yet. Rather than sitting down and teaching phonics, we've talked about examples in the books we're reading.
Before she was reading, I read all the how to teach reading books I could get from the library and from friends who are teachers. What ended up happening was that DD picked up on a great deal through our daily reading. We would check out dozens of books from the library each week in addition to our own home library.
She has picked up some phonics from computer software and PBS shows. She sings the little songs from starfall still so I think that helped.
I don't think it has to be boring.