Big Skills for Little Hands: I Can Trace is a great choice for letter tracing for us. We put each page into a page protector and then made our own book. M loved putting the foam stickers on it for a title, and it helps her to know how to ask for it by name. (See her pride?) (I love that I am trying to purposely NOT be stingy with our foam stickers! So unlike me! Let me know how you use foam letters, too!)
We use dry erase markers on the pages. I have found that as long as the pages are wiped off before putting the book away, it wipes off easily. If the marker stays on the page for longer, it's hard to clean.
Another thing I like about this book is that it has a picture for the child to trace for each letter and a predictable sentence to read. Numbers are also included in the book. Though I love this for my child at her developmental readiness, there is no opportunity for writing the letters/numbers, just tracing them, so it may not be for older children with good writing skills.
I know this is not a unique idea, and I even shared it before for dot-to-dot pages, but I wanted to share it again now that we were using a book. She just loves it! M will trace about half the alphabet pages in a sitting, which pleases me. I let her set her own pace and tell me when she wants to write and when she is done. At this age, I think that is important. I don't care how often we work in the book. I allow her to set the pace.
When appropriate I try to encourage relevant real-world writing, too. This past weekend when company came, she traced, "Welcome Grandma and Grandpa." Father's Day is coming up and she will trace a message for four grandfathers, too, I suspect.