Email subscriptions:
Feedblitz does this. 
It's now partnered with Feedburner, so if you are using Feedburner just go to  "Publicize" and click on "Email subscriptions".

Otherwise go directly to http://www.feedblitz.com/

I haven't used it.  Don't know anything about it other than it must work cause Feedburner uses it.

We use Constant Contact at work.  They're so-so.  Not really made for bloggers.

I was thinking about using Feedblitz myself after reading a recent article about RSS awareness among Internet users.  It's something like 12% of all Internet users are aware of RSS.  And about 7%  *knowingly* use it for subscribing to things.  MyYahoo is the most popular.
This number will skyrocket when the new Vista comes out with RSS features built in. 
Until then though, can't hurt to offer the email subscription option.

Hell, I still subscribe to Steve Garfield in email format.  It serves it's purpose.

--
AQ
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