A Welsh friend of mine (who blogs as Taffdancer) keenly follows the news from Wales. Today Prince William and his fiancée Kate Middleton were launching a lifeboat in Anglesey, and my friend asked me whether William had made a mistake in saying 'God bless her and all that sail in her' (you can hear him on this video), instead of 'all who sail in her'.
Most grammar books say that 'who' should be used in relative clauses when referring to people. However, the respected Michael Swan in his best-selling Popular English Usage says that 'that' is often used instead of 'who', especially in a conversational style, and he gives as examples 'She's the only person that understands me', 'where's the girl that sells the tickets?' and 'he's a man that people like at first sight'.
Moreover, Acts 27:24 of the King James Bible has the phrase "lo, God hath given thee all them that sail with thee". Perhaps that is where Prince William got his grammar from.