I have two young sons, aged two and three. I don't like to let them watch tv very much, but since I work full time from home it is occasionally unavoidable for me. This is the greatest show. It is so educational. After watching it a few times, my son learned to say the entire alphabet. Now he is three, and he can spell the words "sing", "hiccup", "spell", and a few others. He can identify at least half of the letters in the alphabet as well. My young two year old repeats everything on the show as well, and is pretty close to saying the alphabet.
If you're going to let your kids watch tv, I would recommend this show over anything else, including Sesame street. It is completely focused on letter identification, spelling, reading and rhyming. On top of that, it teaches important lessons such as the importance of books and how to problem solve. I absolutely love it!