Sounding it out or not?

I have always thought that if I did not know how to say a word that I should sound it out to find out what it is. According to some teachers, sounding words out is not a good idea. Some say that if a beginning reader sounds a word out they are only making the sounds of each letter individually instead of seeing the word as a whole. This will then hinder their reading because the child will not be able to figure out how the word is really supposed to be pronounced. During my field experience last week, the kindergarten teacher spent a majority of the day talking about "stretching out" the words that the children did not know. While I was observing the children reading individually, I noticed that many of them were trying to read books that were above their reading level and they spent a lot of time stretching out the words they did not know. Although this was helpful some of the time in decoding the words, I noticed that they would sound the word out letter by letter and although they made the noises of each letter they often did not put all of the sounds together to figure out the full word. They would simply move on through the book sounding out letter noises, but not reading the full words or comprehend anything that was happening in the story. I think that for beginning readers, sounding or stretching words out is not the best practice, but for more advanced readers, it can be a good tool to use.