if you work with an 0.7t version then theres no <specular> tag within phong - it has been replaced with the <ior> tag which do basicaly the same but uses other numbers. So the ior controlls the specularity of the phong mat.EDIT: btw, can anybody tell me how to decrease the specular value of a <phong> material?
to your other question: you also can texture a diffuse material. A diffuse material is the same as a phong but without the ior/specular component.
btw, i think common coated wood isn't as specular as glass(which has an ior of 1.52), so an ior of 3 for your wood is pretty unrealistic