You need use capital letter when write names of the city/country/river/organisation or humans/pets names. When you write formal letter to some person you need use capital letter for Вы/Вам/Ваш. We do not use capital letter for "я" and for languages and nationalities.

В русском языке географические названия пишутся с большой буквы. Национальности пишут с маленькой буквы, слово "я" тоже нужно писать с маленькой буквы. Yes, I am English - Да, я англичанин/Да, я из Англии. I live in London - Я живу в Лондоне.

About вы/Вы. As a continuation of my comment to Alex and Yana above: ....So more or less it represents the confusion we have in our heads ourselves. While using 'Вы' a lot (addresing a single person in a polite manner) we risk to get a text, that is both annoying (because of lots of capitals) and _too_ respectful. In the early days of Russian Internet people even joked, that this Вы is an offence, because some other people switched from ты to Вы during quarrels:) Now everything is ok, when people quarrel they just say regular swearings, obscene insults, and wirte _less_ polite comments instead of _more_ polite:) I can explain it. Before the internet we used to see this Вы pretty rarely. Mostly in modern ads and some hand-written old-fashoned letters. Books - majority of the written material we read were books, mostly without Вы - made our eyes accustomed to вы. And now we click on a forum topic....and see Вы, Вы, Вы...in is not quite comfortable, as most of comments are more or less technical and have nothing in common with the high style, which we associate Вы with. On the other hand, people use this Вы, because they are afraid of... well, when you chose between two options, you are confused, you aren't sure and you wish to be polite - you chose the _most_ polite one. Especisally when most of people around do. So both options are bad now. I have personally switched to Вы, but then I decided to struggle with this habit.

capital letters are used for the proper names: Эмма, Лондон, Уругвай names holidays: Новый Год, Рождество, День Благодаренья names of astronomical objects: Марс, Козерог, Северная Корона, звезда Эрцгерцога Карла and atc this is very similar to your rules except I ^_^

Hello Emma! Yoг can find my answer in English to the question about capitalization in Russian here: http://www.italki.com/question/278368