I am slowly but surely adding to my language area, but one of the first things that I bought when I decided to use a Montessori-based curriculum was the sandpaper letters. We use them every day. We use them during circle time to talk about our letter of the month, but then they are used to draw letters in the sand, or to create a letter out of clay, or to match up with other versions of letters we have in the classroom. Sometimes a child will use the sandpaper letters instead of the moveable alphabet to create words.
The younger children are especially drawn to the sensorial aspect of the sandpaper letters. Often, the youngest children in the classroom will just sit on the floor and rub their fingers over the letters.
I bought my version of the sandpaper letters years ago from someone who handmade them. It is a nice set, but since they made of sandpaper glued onto matboard, they are beginning to show signs of wear and use. They are also on the smaller side. I would like to add another set next year, and this time, I plan on ordering them. But for those of you who want a set for one child, or light use, there is a small, reasonably priced set available through Lakeshore Learning.