Don't worry-my dd can recognise three words-I am it. She is doing yr 2/3 maths work, but can't read for billio, despite being in a very bookish environment at home. I pushed her and she refused to read entirely, so have realised that gentle nudging and masses of praise does much more. She is now sounding out 10-12 letter words quite fluently, but knows none by sight (as far as she is telling me anyway )
Famous Five, well each story usually follows a formula. Enid Blyton is popular stuff but she doesn't exactly have you reaching for the dictionary on a regular basis with her choice of vocabulary now does she ! (I very much doubt she used a thesaurus (sp?) on a regular basis.
I would say that the "cat sat on the mat" is perfectly OK for a child barely out of reception.
Once your child kind of clicks with reading they too will come on in leaps and bounds.
My DD is in year 1 and nowhere near being able to read Famous Five type of books. Also loves being read to and has a fantastic imagination and comprehension. I am sure that there are some in her class that can read very well already but I know she will get there in her own time too.
My son has some amazingly good readers in his class too. I don't know if they can read the Famous Five but they are certainly reading at "junior" level rather than "infants". My son is in the normal band .
I think it's quite normal to have a group of such proficient readers in Yr 1. Whilst they are probably quite able the others will catch up, if not overtake. I know of one boy for example who was in the bottom group for everything including reading in year 1 and is now in the top set for everything in Year 3.