What is the Proper use of the apostrophe?

[rosalinda-143.livejournal.com]

Okay, so I know the basics, the things they've taught me in the classroom. But there's one thing that gets me every time.

Is the correct grammar:

Poppy had James' baseball.

or

Poppy had James's baseball.

Thanks in advanced for the help!

peace.love.happiness.

~ J