I had very good experience using a software called High Impact Email. I remember it was a one-time fee of $100.
It comes with templates. Being somewhat of a control freak, I just made my own template using basic html.
It integrated well with Outlook or with a spreadsheet of contacts.
If you include photos in your e-newsletter, they aren't delivered to anyone's inbox until the message is opened and read - meaning when the email is opened, the images are found on a website (yours or the company's) and then downloaded when needed. The beauty of this solution is that your photos aren't clogging anyone's inbox (and getting you on their bad side).
The downside is that there isn't an online solution to collect email address from people who might want your e-newsletter. This can easily be done separately using other means, but it has nothing to do with the software that I mentioned. I've created simple sidebars on websites for this purpose. When someone submits their email information, it comes to me via email. Better yet, would be for this information to go directly into a sql database.
Finally, everyone's email clients interprets html and related code differently - it's a more chaotic environment than say internet browsers. My recommendation is to keep things somewhat minimalistic. I've read that a good rule of thumb is to test using gmail. If gmail will read it, so will most other email clients.
This answers your question on the computer side, but not on the paper side. There is a higher cost to mailings and it typically involves a lot more content. Whereas a few paragraphs will suffice in an email, you typically need to fill 3-4 pages of content for a traditional newsletter.