Hehe!  What a fun question!  Ya'll or Y'all is short for you all, just
like don't is short for do not.  As we all know (or should know) an
apostrophe means there's a missing letter or two, turning the word into
a contraction.  Therefore, to turn the words you all into a contraction
*should* be done y'all because the apostrophe is in the correct position
to replace the "ou" in you... BUT since the word "ya" is a slang word for
"you" that a lot of people use..  turning the slang version of you all
into a contraction would therefore be either y'all (replacing the a in
ya) or ya'll (replacing the a in all.) Which basically means, you can
spell it either way.  It just depends on how you think.
 
Have Fun!
- Jules
ps.  My mother doesn't have a clue what that means cause she doesn't get
the "ya" is slang for you bit, but hopefully I make sense anyway!
[Posted in FML issue 4954]