(Hi folks, first post - good to be here, seems like a wicked forum)
With my current girlfriend, whom I met about a month ago, we had such an attraction and got on so well that one night, less than a week into going out, I just blurted out 'I love you' before I realised what I'd said. I told her that I felt protective and caring and euphoric and all these things which we might as well call love, and that I didn't mean to worry her but I just felt it at that moment. Anyway, I meant it, and we discussed it later - what love is, whether we should say it, how long you should be going out before it's proper to say... the only decision you can reach is when you both feel comfortable saying it. I've been going out with my GF less than a month and I'm happy saying it. What's better is that I know I'm not lying - I wouldn't say it if I wasn't sure.
With my ex, I said it first, and we were in your position - she felt it, but didn't say it. That was fine by me - let her take her own time. When I felt it strongly, I said it, and she would say thank you. After a month or so of this, she said it back. That was a great feeling, and we were together for a couple more years, so I can't say that was a failure.
I see where you're coming from with the letter idea: it's easier to be eloquent in writing, and there is less chance for misunderstanding. Then again, you have no opportunity to read the situation or explain, and it lacks that immediacy. I'd go for saying it in person.
Anyway, for a first post I've gone on a bit, so I'll stop now
Edit: Oh, and bloody good luck to you!