Phonics is an excellent way to teach reading. It give the child a way to recognize words that he already knows that is not possible in any other form of written language. It enables a kid to quickly gain mastery in reading. I never knew a time that I wasn’t able to read. My nephew in kindergarten and first grade could fluently read aloud the Chronicles of Narnia (and just about anything else—I remember him reading Podkayne of Mars) at a level that you just had to laugh over because it was so beautiful.
I also agree with you that as an adult, I certainly don't sound out words (except still with Hebrew and Russian, and some rare English words). I sight read (english, latin, french and spanish) now, with decades of practice.
But I learned to read right after I graduated from diapers, my mother teaching me with an ancient phonetics reader.
Phonetics was my foundation.
/johnny