Take a look at Spellathon launched last November. A free digital resource for english / amercan spelling practice. Kids from over 90 countries are playing and practicing spelling.
Try the "Learn to Read" section of starfall.com. The students can play along as a group.
abcya.com might give you some good ideas as well.
Starfall.com is a great resource--
I agree with Lorianne and recommend Voicethread! I love the idea of making these digital class books! I used it with Kindergarteners in a lab situation, but I spent too much time helping set up microphones and troubleshooting 25 computers. I can see how having Voicethread set up on one computer and have the students rotate to it would work even better! I can imagine them being able to answer essential questions for the day, reflecting on their learning and even answering fun survey questions like their favorite food through Voicethread! Thanks for letting me share my excitement for Voicethread!