Use finger puppets, each decorated with a letter and a scene that illustrates the letter sound. As you display each puppet, say a sentence that uses the letter sound several times. As an alternative, you can put the finger puppets on sticks. (See Resources below.)
Use hand puppets in dramatic conflict to make it fun to learn the alphabet. Buy or make a hero puppet who displays and says the letters correctly, then introduce a foil who tries to spoil the hero's efforts.
Let children make individual puppets that can display different alphabet letters. Craft the puppets from simple materials such as lunch bags or sticks and paper plates, and let the children tape on the correct letter as the teacher pronounces the sound.
Make and use sock puppets. Use your hand to let the puppet exaggerate the enunciation of the letters -- and have the children join in the fun. (For instance, the sound "i" becomes "iiiiiiiii.")