From what I can gather, DS hasn't started any phonics yet; though the teacher said during the home visit that they would be doing 5 sounds/week.
Regarding blending, yes you can just wait for it to click; but I think what really is the precursor which might be taught explicitly (thus making it accessible to all, rather than just waiting for the kids to figure it out by themselves; a bit like teaching phonics explicitly) - is the opposite to blending, i.e. segmenting.
Which is basically just 'hearing' and identifying the sounds in a word.
So yes to i-spy games (hearing the first sound in a word) but extend it to other parts of the word once the first sound has been 'mastered' - i-spy something that ends with the sound /t/ ... then (starting with three-sound words), i-spy something that has the sound /a/ somewhere/in the middle.
i-spy is quite advanced though, if a child can't 'hear' the sounds yet, you can try easier versions at first. E.g. where you place three objects on a table and ask which one begins/ends with/has in the middle, a certain sound. And similar.
Once a child can hear the sounds, and knows some phonics, they may not yet be able to read a single word, but they can write words! Give them letter magnets (for example) and an item (e.g. a jug) and watch them write a word.
Once they've got the segmenting/hearing the various sounds of a word down pat, and have practised putting words together from the sounds they know, blending - i.e. reading back what they just wrote - is a much smaller leap, I think. (though at first it won't be real blending/reading, it will be just remembering what they just wrote)
That's why Montessori said that children would learn to write before they would learn to read. Because take all the skills you need to write (hearing the sounds, segmenting the words, identifying the phonics, making words from the individual sounds), then add some more (blending), to read. But learning to blend if you can't really segment yet, is hard.
So, in a very roundabout way, yes if a child has never been taught anything about segmenting, and hasn't worked it out by themselves, then the 'phonics' way of learning to read may well be harder for them; than it would be for children who have been taught segmenting (which may, or may not, happen as part of the phonics teaching). Just IMHO.