Always lower case - so 'small' letters. And the CORRECT letter sound, which I think is on Cbeebies Alphablocks, and other places.
There is also a correct sequence, so not normal 'alphabetical' order, but it starts: 's a t p i n' and that is is order taught in most schools.
But at this age, it should only be an exploratory game, and not 'teaching' as such.
A set of plastic lower case letters is good, or a letters 'sorting tray' (if they are still around; our DS had one thirty years ago!).
Help her to learn the initial sounds of words, so in due course she will start to make the connection between a sound and a word. If she has 'mark making' resources she can possibly start writing letter shapes. Or on a tray of dry sand, or flour, with a finger.
I give a couple of links:
www.phonicsinternational.com/index.html
www.bbc.co.uk/cbeebies/shows/alphablocks
Use these for ideas, and do 'real' things with her, rather than TV or computer things at first.
To prepare yourself for later, school, stages you might find this book useful, but again, don't 'teach' from it, but rather let it be something that she can experience and get used to as she matures:
An inexpensive and easy to use book, that can encourage children with reading, spelling and writing, and really help them to understand Phonics, is reviewed in the MN Book Reviews section. Just search ‘Phonics’.