I've had 4 kids go through different reading systems. There are a few problems with the phonics that I've encountered, possibly not as a result of phonics itself but because of implementation.
I've posted on this before, but the Y1 phonics test is crazy imo. It's illogical, because as others have said on here, the English language is not always predictable, so you can't always know which of the possibilities it is. In the made up words section, any 'plausible' reading is ok. In the 'real words' section, you have to get the 'right' pronunciation.
So using the word 'sew' - if you pronounced it 'soo' you would not get it right. If however in the made up word bit you had the word 'trew', a pronunciation of 'troo' would be ok. They say it's not a reading test, but phonics 'screening' but then the marking is illogical.
I also think ds3 has struggled through using phonics. He has a very visual memory, but he really finds it hard to turn the 'decoded' word into a word he understands - so he will use the phonics to sound out the word, and will usually get it right, but doesn't then make the connection with the word. Whereas words he's learned, he remembers very quickly.
So typically, reading a book with him, he will say something like 'The car has a ...... w-h WH e-e- EE l WH EEEEEE L WH EEEEEE L WH EEEEE L WHEEL' - what is that?'
It takes a long time to get from him saying the word correctly to getting what it is iyswim. Once he's read it, he's memorised it, so he then reads it easily with understanding.
With my other kids, the eldest went through pre-phonics, and that really suited him - they did a bit of phonics at school but he didn't really get the idea of blending. Dd was just on the cusp of phonics, but she basically taught herself to read before school, Ds2 did phonics with a bit of other thrown in, but he seemed to go from no reading to fluent reading overnight, we didn't have much of a progression! (Literally - the teacher heard him read one day and put him up 6 reading levels!!!).