Letterpop - make beautiful newsletters online
The set of templates is somewhat limited right now, and heavily towards holiday themes. This makes sense, since this is the type of web service that will appeal to families for holiday family updates. There are also a number of generic templates, and luckily all of the templates are very well designed and attractive to look at. Personally I'd rather have a smaller selection with better templates to choose from rather than a huge selection of so-so templates.
Once you've created your newsletter, you have the choice of sending it as an email directly to your list of contacts, or publishing it to a dedicated address that you can then send to your contacts. The system keeps a profile page showing your history of newsletters, as well as allowing you to save your progress when working on a newsletter so you can come back and continue where you left off.
If I have a knock against LetterPop!, it's simply that it took forever for my signup to be processed. I suppose I should cut them some slack given that they're in a beta phase, but I was certainly surprised at how long it took. The page after you sign up for a beta account warns you that it could take up to 15 minutes, or you may have to contact support directly. They weren't kidding.