I was wrong about the "delete letter." This button in the game must delete letters from your tray at the bottom of the screen. (I haven't verified this because in order to do so, I would have to use a coin)
I do still want buyers to beware of the in-app purchases.
Since there are no instructions in the game, here is what i believe is happening. The "show letter" reveals part of the answer, the "delete letter" takes out a letter from your tray, and "skip" obviously skips to the next puzzle. (I could be wrong, but I don't seem to see any instructions)
If any other reviewers can verify that I am correct, that would be just dandy. Yes, if you are good, you don't have to spend coins, but if you make a good UI, then users aren't guessing how to work your app.