Many reading programs teach a combination of phonics skills and sight word memorization although some focus more strongly on one or the other. Those who adopt a whole language approach assert that children naturally learn to read when exposed to a language-rich environment, including a heavy reliance on sight words. This method may work well for some children, but it is not without its disadvantages.
Lack of Decoding Skills
Children who learn a lot of sight words are focusing on the image of the word as a whole rather than the sound of each individual letter. This might work well with words that don't follow typical phonics rules, but it prevents students from reading a word they've never encountered. The student might not be able to sound out "can," for example,and might start guessing words that look similar like "cat" or "car."
Focusing on sight words limits the child's reading vocabulary as she'll only be able to read words she's been taught. In a phonics-based approach, a child will come to an unfamiliar word, attempt to sound it out, and then ask what the word means if she doesn't know. This gives her the confidence she needs to read anything. A child who learns by sight reading is limited to books that include the words she's been taught. She may also simply memorize the text of the book and not be able to read the same word in a different book.
Lack of Structure
In a phonics-based approach, there is a pattern that teachers build on, starting with teaching the sounds of individual letters, building up to two- or three-letter words, then introducing phonemes. Strictly teaching by sight reading doesn't have this same natural progression. For example, a child might be able to recognize and read the words "little" and "tuffet" from repeating the "Little Miss Muffet" nursery rhyme, but wouldn't be able to read more basic words, like "cat" or "dog."
Losing Analytic Readers
Some children might learn well through the whole language approach, but many are analytic learners who would do better with a phonics-based approach. When focusing on sight reading, you might lose these students. They might think that they lack the ability to learn to read when taking a different approach may be all that's really necessary.