I have seen so many beautiful cakes here on CC with writings using fondant cut out letters. Where could I find some. The only ones I have are from Michael's but they don't look fancy, just regular capital letters.

one place is globalsugarart.com... they are called tappits.. they are by fmm products. there is a tutoria on that site showing how to use them.. and tonedna a c/cer is on youtube showing how to use them. hth.. they have lots of cutters. not only the lettering...

I was going to recommend FMM tappits too!
I only just got mine and they take a bit of getting used to (especially the 'funky' letters) but they look great.
Good luck
Emma