The word thou is archaic now, but before it fell out of use, thou was the second person singular form and you was the second person plural. The lapse of this usage that made you bear the weight of both the singular and the plural has lead to the introduction of the plural forms y'all and youse in some American regional dialects. The use of the older thou form persists in popular culture through older works of English literature, including the plays of Shakespeare and the King James translation of the Bible. Unfortunately, the thou form may appear in literature classwork, but it does not typically appear in grammar class. Consequently, some people think thou is simple a more formal way of saying you, and abuse the poor pronoun ferociously. Pronoun abuse is a peeve of mine; but since I lack the resources to run a pronoun abuse hotline, I'll settle for writing lists like this one.

How to use thou

• Use thou for singular and you for plural. It is not correct to thunder from the pulpit Thou art sinners! unless perhaps you're addressing someone with multiple personality disorder -- and in that case, don't you think you're being a bit hard on the poor fellow? It would be grammatically correct to say You are sinners -- except thee, though the I will leave the truthfulness of the statement to the religious authorities.
• Conjugate! You would wince (or perhaps thou wouldst wince) if you heard someone say we am going now; the phrase thou are going now is just as wrong. It should be we are going now and thou art going now. In general, verbs that go with thou end with an st, though there are irregular verbs that don't fit (like art). Thou dost, thou makest, thou thinkest, thou hast.
• Be consistent! Unless you need to do so for some specific reason, don't switch between the verb forms in mid-sentence That means that if you start with thou, you should use thy and thine for possessives. If you're unsure how to use thou correctly, why not use the modern forms?
• Do not mistake thou for a particularly impressive or authoritative form of the modern you. It has a specific meaning; that meaning should be respected. If you're unsure of the grammar of the old form and still want to give your prayers and hymns a sense of religious grandeur, use capitalization. And if Terry Pratchett's personification of Death can speak in capitals all the time, surely you can manage it for a single word on occassion.