OP please do not worry. Honestly.
Your DS2 is fine. As is your DS1. Please remember that some DC just 'get it' early with reading. Others take longer for it to click. It's entirely possible that a later starter will catch up with and even overtake those early bloomers, and can certainly become more enthusiastic and avid readers in the longer term.
Here's a few examples for you (My DS1's cohort, now in Y6, have just finished their SATs mocks).
DS1's best friend: started reception already reading, around stage 3 ORT I think, flew through the levels, free reader by start of Y1. Got L5 reading in the SATs mock and predicted a good level 5.
Friend's DD: not reading when started reception but took to it early and again, flew through the levels and an early free reader. Got L5 reading in the SATs mock and predicted a good level 5.
My DS1: not reading when started reception, very 'average' in terms of early reading development, progressed well but felt quite slow to me. Stage 2 at end reception, stage 5 by end Y1, stage 9 (I think) by end Y2, finally made a free reader at start of Y4. Got L5 reading in the SATs mock and predicted a good level 5.
Obviously the SATs levels will mean sweet bugger all going forward (because SATs levels are going) but the point I'm trying to make is that, now, at age 10/11, you wouldn't really be able to pick out which of those three children was the earliest free reader if you didn't know.
Your boys are FINE. (I too also have a reception DS on level 1 books and I am not worried about him in the slightest. Probably because I've seen how things even out in the longer term).
Please remember too that different schools seem to take very different approaches to how they move the DC through the reading schemes and I suspect this is what has triggered your friend's comment. Her school is probably taking a rather more driven approach to yours. This is not necessarily a good thing! Interestingly, our infant school (ofsted outstanding, FWIW) takes a very gentle, individual approach to reading and at this point in reception there will be more than a few DC who have yet to even bring a reading book home. Their Y2 SATS results for reading have always been very high (around 50% getting level 3 with the majority of remainder achieving level 2) so they're clearly doing something right.