Geoff Pullum of Language Log writes that "one of the very worst things about the English writing system ... is that it very clearly employs 27 letters in the spelling of words but there is a huge and long-standing conspiracy to market it as having only 26." He explains:
One of the worst things about the forgotten letter is that it never stands for a sound in native English words. Indeed, it could be argued that it never appears as a letter within the plain form of any lexeme, and never occurs initially in any word in modern English. But it does appear as the first letter of the two-letter genitive singular suffix of regular nouns; as the second letter of the two-letter genitive plural suffix; as the middle of the three letters that spell the suffix identifying the negative form of auxiliary verbs; as the first letter in the written clitic forms of am, are, had, has, have, is, will, and would; and it has miscellaneous other uses. But though obligatory where it occurs, it never corresponds to any sound in native words.
If you're still confused, read the whole thing!