This works best if you have the book, or are least familiar with the ideas presented in Making Words (can't remember the author's name at the mo'.)
Basically the premise is having one big word which is scrambled and written on the board in its scrambled form, the letters of which students will use to make other words. The ultimate challenge is to discover what the actual word is that uses all of the letters. However, in the process, children can practice their spelling and phonemic awareness by challenging themselves to come up with as many words as possible from those letters.
The twist is this: instead of photocopying all those letters then trying to have the children keep track of them in the midst of this activity, have the children work in pairs, each partner being responsible to form half of the letters of the word out of his/her playdough (get a recipe and make your own). Then, as a pair, they come up with as many words as possible. This turned out to be a very fun and productive activity when I taught in a Sheltered English class. Some of the students needed the benefit of practicing letter formation, others were sophisticated enough to discover the mystery word, but all of them got practice with their phonemic awareness. To make this extra fun, if they were especially on-task during the activity, I gave them 5 or 10 minutes of free time with the playdough. They were thrilled and uncharacteristically well-behaved every time we did this!