Okay I guess it's time for me to way in on this debate.
So here goes...
According to the lore as set in both the first codex - Codex: Tau
and the second codex - Tau Empire
, Sister Verity of the Ordos Dialogus created the first Gothic-Tau lexicon. She created the first alphabet substituting Gothic letters for the Tau letters. (Note that "F" and "V" are the actually the same sound in Tau'sia.) And she was the one who invented convention of separating the individual Tau words by the use of an apostrophe.
But Tau'sia has no punctuation marks: no apostrophes, commas, periods, question marks, or exclamation points.
Therefore the apostrophes don't mean anything, they're probably just put there to indicate to a reader of Gothic, that a single Tau word is made up of separate individual Tau words.
So either way you spell it "T'au" or "Tau" is still said "Tao".
Gav Thorpe mentions in article from his website Origins of the Tau
that the original spelling was going to be "Tao".
Let's us not tie ourselves in knots because Games Workshop wants to fiddle with their intellectual property rights...again