Using Phonics to Teach Beginning Readers

I am currently in a lab in which we are using phonics lessons in unison with predictable text books that scaffold the specific phonics lesson that we are learning.  As a product of phonics-free education, I am having a hard time adapting to this alien teaching technique.  I do not think that phonics and predictable text alone allows children to have enough experience to learn how to read.  Phonics is such a wishy-washy theory because there are so many expectations to each word.  I know so many people who grew up learning to read solely by use of phonics (yes, I grew up in the "Hooked on Phonics Worked for Me" era).  These people to this day cannot spell many of the words that are commonly used words. Words such as "come" and "of" are not phonemically decodeable.  So how do you teach this to children who are stuck to using their phonics knowledge? Also children that learn to use letters by remembering a rhyme or motion that has to do with the sound it makes is also misleading.  It sounds like a foolproof way to remember vowel pronunciations, but what happens when after first grade you have summer break and then return to find you do not remember any of those rhymes or motions anymore?  Then you are stuck having to relearn all of the letters and letter combinations from the last year.  Phonics supporters do not believe in the use of word walls. I have come to find that word walls are very useful after using it in lab experiences with third grade students.  I think that a combination of phonemic decoding, sight words, and other techniques need to be used together to teach children how to read.  This way children have many options and techniques to use in order to decipher unknown words and read on any level.