Michele at Polliwog makes beautiful sandpaper letters, they are stylish and modern looking and affordable.
The sandpaper letters we use, I made myself about 3 years ago and it took me forever, if I was starting over again I would be straight over to Polliwog to buy a set rather than go through it all again.
She sells regular sized lower case, upper case and numbers which are mounted on a 3 inch wide by 5 inch high piece of 1/8 inch thick birch plywood plus mini sized cards for those short on space. They have a marked spot on each letter indicating the starting point. The wood and the sandpaper are cut out with a laser engraver for a nice precision cut each time.
What's more, if you are looking for a specific size or font Michele is willing to work with you to try and make what you are looking for.