Hi J.,
Hooked On Phonics was too expensive when my kids were little. I bought a set of "Bob" books, which are short little stories, each one featuring 3 new sounds. My kids loved them. My son learned how to read using these books around kindergarten. My daughter wasn't reading ready until half way through 1st grade (then took off like a rocket!). My kids also played with the Reader Rabbit and Reading Adventures software on the computer, which was very effective.
Keep in mind that it's not just about the product you use, though -- your child has to be neurologically ready to learn the phonemic decoding needed for reading. Give the books (or whatever you choose) a try, but don't be disheartened if she turns out to not be ready (even with her terrific memory skills). If she's not ready (and even if she is), there are lots of other ways you can challenge her academically, but I encourage you to approach whatever you do as play, not school work. One of the subjects that I think our public schools do a poor job of teaching is science -- too much rote, not enough hands-on experimental learning. Teach her to become a questioning observer by encouraging her to ask questions about the world around her and then finding ways to explore answers. For example, a simple question might be "what happens if I mix different colors together?" A simple "experiment" could be to have her mix drops of food coloring or paint together to see how the colors change. (Of course, explaining the "why" of things can be very challenging at this age! Trips to a local science or children's museum and the internet can help provide explanations). Another great way to spark creative thinking would be to ask her to create a way to improve on a simple object, like a spoon or a crayon, and then supply her with kid-friendly materials to try to create a prototype of her idea (e.g., clay, paper mache, pipe cleaners, legos, etc.)
