I won't go into all the details here as she tells it better on her blog. Suzi has also written a guide to using phonics which you can download from here.
There are many resources on phonics on Suzi's "do once and share" wiki which are amazing.
Here are links to a couple more of Suzi's phonics presentations:
Creativity and (French) Phonics
You say mince and I say mince
Other people have produced some excellent phonics resources, too:
Rachel Hawkes's website has a list of web based phonics resources
Helena Butterfield has produced a French phonics resource based on Jolly Phonics.
She has also produced a German pronunciation guide, too.
There is also a very good German phonics resource produced by JacquiT (Sadly, I don't know who she is. If anyone knows please tell me so I can give her the credit she is due.)
There is also this German pronunciation guide clip on Youtube