Here are four sets of words that give people trouble in their writing. I see mistakes with these on a daily basis...

ITS - pronoun - belonging to it
    Its screen was too small for watching movies.

IT'S - contraction for it is
    It's time to go.


THERE - a place
    Put the chair there.

THEY'RE - contraction for they are
    They're going to London.

THEIR - pronoun - belonging to them
    Their car is red.


TWO - one plus one - a number
    Hand me two pens

TO - preposition denoting direction
    Go to the store.

TOO - means also
    We are going to the store too.


YOUR - pronoun belonging to you
    May I borrow your sweater?

YOU'RE - contraction for you are
    You're very welcome!