F-I-G spells.....what?

Yesterday I was teaching one of my first grade classes how to read words with the letters i in them.  I would write i-t on the board and the kids would yell IT!  Then I would add an s in front and they would yell SIT!  Sometimes they would pronounce the i wrong and say eh or ah instead of ih.  I wrote i-g on the board and all the kids yelled IG! So I added an f to the i-g and one kid yelled out "FAG!"  Others followed and suddenly the whole class was yelling "FAG! FAG!"  I had to stifle my laughter because these children all thought they were saying the word correctly!  Eventually I got them to say fig and NOT fag which was a relief.  The situation reminded me of a girl that I tutor who likes to read books about Hannah Montana.  For some reason she could not remember how to pronounce pop, it always came out as "poop".  When I told her what the meaning of poop was she laughed and said "Hannah Montana is a poop star!