Anyone who went to college before 1999 knows that "phugly" and "fugly" refer to one thing and one thing only. In the vernacular - and yes, this is crude slang (but this IS web site devoted to 'urban' and not necessarily to 'urbane' language usage)- the word "phugly/fugly" was coined as a contraction of the phrase "fucking ugly." Sorry, "phat" was never part of the equation.
1) "No doubt about it, that was one phugly dude."
2) "I don't know how to tell you this, honey, but your new outfit is... phugly."