I'm on my lunch break and don't have time to read responses thus far so forgive me if I repeat.
My daughter, also in 1st grade, learns better by touching objects. Things seem to stay with her if she's had her hands on it. Every night we use bananagram tiles (scrabble tiles would work too) to form her spelling words. I make a big pile in the center of the table then I'll give her a word to build. She has to sound out the word to know which letters to search for. Once she builds the word if it is correct we high five and move to the next one. If it is phonetically correct but spelled incorrect, I tell her exactly that. "Wow, you sounded that out and spelled it exactly like it sounds, so phonetically you are correct, however the word is actually spelled like this____." I want to encourage her to continue to sound it out and if she's right in how it sounds kudos but it is important to spell it correctly too.
I also have a list of "spelling activities" that she can choose from each night to practice writing her words. For example one night she may choose to write the words in alpha order. I give her a list of the 10 spelling words in no particular order and she has to write them in order. The next night she may choose to do "Across and Down" where she writes the word across the line and then down from the 1st letter like a crossword puzzle. Example:
Down
o
w
n
The next night she may do "Choo-Choo" words. She will write all 10 words as one big word train. Each word is written in a different color pencil or marker.
Or she is to write all of her spelling words and then go back and circle all of the consonants or trace all of the vowels in blue, etc.
Or she can draw a picture that includes 10 bees, then she is to write each of her words in one of the "spelling bees."
Or connect the dots. She can write the words using dots and then connect the dots in a different color.
The trick is to come up with ways to give them a bit of control, they get to choose the activity but make the activities fun for them as well as educational.
In our case on Monday thru Wednesday she gets to use the written list that I've prepared for her to complete her spelling activity. After completing the activity we use the bananagrams and she has to build the words from memory. On Thursday I give her a spelling test which she has to complete from memory. If she is struggling with any words then she does the spelling activity using those words if not we skip the activity and just do the bananagrams because she loves doing them and thinks it's a fun game.
I also have a word ring I've put together for her over the past few years. I started by printing out age appropriate site words. I cut them into squares about 2 inches tall and 4 inches wide. Punch a hole through the top and put them on a metal ring. You can find them in the dollar store or walmart in the school supplies. I add her spelling words to the ring each week. We flip through the word ring daily so that she quickly recognizes the site words and spelling words to increase her reading skills.
As for reading, I started out with site word and word family books that I purchased online. I believe I got them from ebay or amazon but they were extremely reasonable. These are not long story books but are about 10 pages that emphasize the 2 site words covered in each book. Here's the link to the books I used:
http://www.amazon.com/Sight-Word-Readers-Parent-Pack/dp/0...
I started out by having her read 2 of the books every night until she knew all of the words in each book. Then I'd add a book every week until eventually she was reading me all 25 books each night for a few weeks. Then we moved on to regular books. Now we read one book a night and if she is really tired we alternate and she will read a page and then I will read a page. If she comes to a word she doesn't recognize I have her sound it out. 9 times out of 10 she gets it and if she doesn't then I help her sound it out slowly. Reading can be very over whelming if they are presented with what they perceive as a "big book" however if you start small with the site word books it will help to build his confidence. Confidence is key here.
Several years ago we got her a few computer games to play to help learn her abc's, phonics, math, etc. I started her out with the toddler versions for shapes, colors, and abc's and then we moved up to preschool, kindergarten, and 1st grade. Your son may learn better from visualization while using his hands as well. Maybe give something like this a try:
http://www.amazon.com/Disney-Learning-Kindergarten-Bundle...
We also love the Jump start explorers games.
Santa brought my daughter a leappad tablet last year and most of the games shes plays on it are educational and really work with reading, writing, and math. I think the games really helped her put the sounds with the letters because she repeatedly heard mickey, or pooh and friends saying the letter sounds and she had to pick the letter to match it.
I just try to keep learning as fun as possible so that it is something she enjoys doing and it doesn't become a chore. I hope some of this will help your son too :)
Peace and Blessings,
T. B