Here at Diamond Website Conversion, we use MailChimp for our email campaigns. The great thing about MailChimp is that it is a great service for anyone starting off. The actually have a free account that helps bootstrapping business owners and bloggers build a solid following. In fact, the limit on their free account is for anyone with under 2,000 subscribers and allows you to send out a maximum of 12,000 emails per month.
The other convenience with MailChimp is that it integrates with most content management systems like WordPress, and you can even connect it with Facebook. You can even broadcast a copy of your newsletters to your Facebook fan page streams, as well as Twitter!