Drop Caps is an old WordPress plugin that many bloggers use for making the first alphabet larger than the normal font size of your website content. It works for posts, pages and comments Although the plugin hasn’t ben updated in over 2 years but still it works fine in latest WP release i.e. 3.5.1 . I have already check it and it is working fine. The plugin comes with some cool CSS styling and lots of other options.
Install and activate Drop Caps. After activation it automatically starts its work, you can visit Dashboard -> Settings -> Drop Caps page for more options. you can exclude it from certain posts, pages, page types, excerpts, archive pages etc.
The above given plugin is best but still if you like to get control over font, size, color and vertical alignment of first letter then use Initial Letter plugin. After activation you can set your custom color and other options from Dashboard -> Settings -> Initial Letter page.