As an elementary reading specialist and instructional coach I encourage the use of phonetic or invented spellings in some situations, such as when brainstorming and composing or drafting a piece. This is because the focus during the initial stages of the writing process should be on the development and organization of ideas into a cohesive piece.
Children often get intimidated by correct spelling of a specific unknown word and therefore lose the momentum they have developed during their drafting. This can lead to decreased motivation to continue the piece in addition to decreased efforts to attempt to include new vocabulary or more complex words than they have mastered in their spelling work. The revision and editing stages are the most appropriate times for teachers to assist students in understanding new ways to check their spelling.
Orthographic knowledge (word knowledge) is a developmental process beginning with letter-name spellers in kindergarten and first grade (who spell using the sounds they hear in the names of the letters of the alphabet) to within-word spellers in second and third grade (who accurately represent medial vowels within words with regular consonant-vowel-consonant patterns and include digraphs and blends) to syllables- and affixes-spellers in fourth grade (who use common English roots and prefixes/suffixes to build polysyllabic words) and finally to Derivational Constancy spellers in fifth grade and beyond (who have an extensive knowledge of Greek and Latin roots and affixes and routinely spell multisyllabic words with accuracy).
If we encourage students to work on the inclusion of descriptive, alliterative or figurative words in their initial-stage writing starting at first grade (e.g., by using the "Word Choice," Traits of Writing), we need to expect that the children will not yet be developmentally ready to spell these words. Allowing them the use of phonetic or invented spelling encourages them to attempt more complex words without punishing them for this attempt.