The digamma (pronounced like a W) was lost in most Greek versions of the alphabet (each city-state had its own version until the Ionic alphabet became standard) because the "w" became silent. A number of Greek words originally had a W which was lost (like the W in sword in English). Sometimes Homeric lines seem unmetrical until it is realized that in Homer's time there was a W sound still being pronounced.
One example is Greek oinos "wine" (cf. Latin vinum which had a W sound for the V)--it was woinos earlier in Greek. Or Greek ergon, originally wergon, which is cognate with English "work" (G in Greek often corresponds to K in English).