Any homeschoolers have good letter recognition/phonics resources?

[OpenRoot]

Since so many of you here homeschool I though I'd ask - does anyone have any HS resources or just ideas for teaching letter recognition and basic phonics to a 5 year old with a probable learning disorder? My DS turned 5 in April and we think he may be dyslexic. The public schools told us it is too early to test him and that he could just be on the 'slower end of normal' on the spectrum, but mother's intuition and having worked with young children for years tells me otherwise. We have been working with him for years (yes, years!) and he still only knows about 7 letters cold and confuses several others. He also has trouble recognizing written numbers although he can count to 40 verbally. No social or behavioral issues, and generally takes in and retains verbal info well. He is very eager to please and gets discouraged easily so I'm looking for fun or easy to incorporate into every day type activities. Its heartbreaking to see him try so hard and be so frustrated. His brother is 4 and knows all of his letters, sounds, and is beginning reading.

If it helps with ideas or pointing in the right direction, he loves singing, dancing, anything artsy/creative in general.

I could see us yanking him right out of public school if they refuse to take it seriously this year in kindergarten so we could get him the help he needs in reading elsewhere and homeschool the rest. To be honest, we always saw our kids going through the PS system, so I'm not sure of where to start. Any help is greatly appreciated!