It seems like all interfaces are video and using pictographs. The very little text we see is things like RED or BnL which perhaps are more recognized as symbols than really read — I think that's referred to as functionally illiterate. And consider the pictographic nature of the credit sequence which resembles things like cave paintings where the history of people is being described with pictures rather than with words.
Children are taught English (of a sort) by Nanny-bots
And the Captain is clearly reading aloud (albeit with some difficulty) from his display screen
and directly from Manuel, this time with more confidence
The script also notes that the Captain isn't simply working out the text from contextual clues (e.g. the pictures)
It's likely that they were literate, but their luxury life on the Axiom had made them simple. We know that they've at least been taught for the scene where the babies are being read and shown the alphabet by the robotic teacher. They probably just never exercised their literacy as what they seem to be doing the most is simply talking.