Licking Letters is a pretty fun beginning spelling game designed for the iPhone. It is available for free download for a limited time. It is normally $0.99.
This app introduces 3 to 5 letter words starting with 3 letters and automatically adjusting in difficulty with mastery. You help the frog grab the flying letters to spell the word displayed. The game is quite forgiving since you can tap anywhere on the screen to grab letters and play does not stop when you choose the wrong letters. You can toggle the game between spelling in order or allow your child to choose letters in any order. Finish correctly matching the letters to spell the words in order to earn coins. The coins can be redeemed to buy clothes to dress the frog up. There are mini-games where more coins can also be earned. The game also allows you to save progress in up to 3 student profiles.
The only downside to this game at the moment is that is does not offer the option to increase difficulty by toggling off the word hint, so the game is restricted to just a match and find type play. I think that the learning could also be extended if they could add phonetic sounds as an option for spelling as well. There are other spelling apps I favor that have a broader skills range, but this is still a good beginning introductory app for toddlers and preschoolers.
Recommended for ages 2 to 5. This can be used for early word and spelling skills if you are homeschooling.