Its and It's are two different words in the English language. Each has its own meaning and rules for use. This page explains these rules.
How can that be? You're wrong wrong wrong! "It's" is perfectly cromulent for the possessive form. I've been doing it all my life, and I see it all the time.
It is important to note that "many people think something is correct" does not have the same definition as "something is correct."
Do you have a handy way of remembering this rule?
Sure thing. Keep in mind that "its" is the gender-neutral equivalent of "his" and "hers" (all are pronouns, in case you're interested). You would not write "hi's" or "her's." That's why you don't write "it's" when using the possessive form of "it."
What should I do when I see a forum post, a digg submission, or a Slashdot summary that includes an incorrect spelling of the word?
Why, you should post a link to how-to-spell-its.com, of course!