I think that it is very important that parents and teachers of reading embrace the idea that the more strategies a beginning reader has, the faster the learning process will be. To quote from the Journal of Educational Research:
The most convincing rationale for teaching sight words is that if they are well selected they will, because of their high frequency in printed materials, have high utility at all levels of reading development. Furthermore, they help to make possible a focus on meaning as well as decoding in early reading, and at the same time they can serve as a basis for analytic phonics instruction.
Knowing a few words in a new book provides confidence for an early reader. If a child sees a few words in a new book that he/she is certain of, the task of reading seems easier. When an emergent reader is reading a new book and pointing to each word, sight words that he knows provide a base for making sense of the text.
Many of the words that are repeated over and over again in beginning reading books do not follow the rules of phonics. Words like the, said, come, and of, would all be pronounced differently if a pure phonics application was utilized. Other words on a sight word list, even if spelled phonetically, help children decode new words by applying phonetic rules. For example, if in is a learned sight word, it will be easier for a new reader to decode pin, tin, fin, and even pan, tan and fan. Children learn that by manipulating the beginning and ending sound they can change the word.
An age appropriate sight words list should be taught in conjunction with phonics to provide new readers another strategy to help them learn to read.