My kids (3yrs & 22mos) love the show. My 3 year old daughter was already pretty good with her letters and I can see my son really getting into repeating the letters and words. For the most part it accomplishes what it sets out to do.
While I can see the value in showing the consequences of changing words, I have a problem with the major alterations to classic stories. Even before they make their word change at the end of each episode, they have completely rewrittend the story.
Goldilocks was falsely accused of eating the porridge, breaking the chair, sleeping in the bed.
The Boy Who Cried Wolf didn't lie.
The Troll was the good guy in The Three Billy Goats Gruff.
They completely undermine and contradict the messages of the original stories. Wouldn't it be better to find actual stories that solve problems similar to those of the characters, rather than rewrite something to suit what they need.