There are many ways to doing this. I've tried www.constantcontact.com which comes with a wide variety of templates. But it charges 15$/month for up to 500 subscribers, with progressive scales if you have more subscribers.

If you produce an rss-feed, you can use a service that automatically creates newsletters from rss-feeds. One such service is www.feedblitz.com, which I've used sporadically, but produces reliability results, provided that you're not too concerned about look & feel of newsletter. Another service in this league is www.aweber.com. But the good thing about feedblitz is that it's free (if you can accept advertising inserts).

If you're more adventurous, and have access to a php-mysql server, you could use an open-source software to build you're own e-mail marketing service. This is not rocket science, but not for the faint-hearted either. If you're open to go to the server side, let me know and I'll dig up the reference to a program is used in the past.

Hope one of these alternatives will work for you. Good luck.

join google and use their free services to make a free webpage

Yes, there is and there is no.
Creating an effective newsletter in order to be succeeded is not one of the easiest, inexpensive / low cost ways. Newsletter is a reflection of you and your company. First to select an attractive name. Everyone is trying to be creative while choosing the name.
Invite your employees to write articles in their area of expertise with extra tips (without a few tips it will not work). Make sure each employee on this team proofs each article so you can have several pairs of eyes looking for mistakes. Seek the help of a freelance writer. Make a plan to study newsletters from others to get ideas on what type of newsletter you'd like to create for your own business. Take help from the freelancers in exchange of money (like Jason).

The newsletter is supposed to be informative, not full of advertisements. Don't allow to use big words and big bombastic sentence in the newspaper. Easy and words and sentences are preferable, and avoid Technical Jargon, Keep the stories short and simple & attractive. Avoid spelling mistake in the newspaper. Again, nobody would like to buy a newspaper if it is just a bunch of plain words, no pictures and no headlines. Try to make the front page and last page in four colors. While some people prefer reading a full-color newsletter, they will still read one in color, black and white.

1. Put the newsletter on the Web.
2. Send the newsletter in e-mail.
3. Distribute your newsletter in all ways and track response.
4. Select the dynamic pictures.
5. Make the text, design, layout attractive and short simple.

http://drupal.org/node/164547

http://office.microsoft.com/en-us/publisher-help/create-a-newsletter-to-keep-in-touch-with-customers-HA010224104.aspx

http://www.google.com/images?hl=en&q=best%20way%20to%20create%20a%20newsletter&um=1&ie=UTF-8&source=og&sa=N&tab=wi&biw=800&bih=425

A beginning note... I haven't used any of these but my father has a website with C-panel one of the services is Fantistico which has a wonderful list of services such as the following:

And for what you wanted!!! A free Emailer... fantastic for newsletters: (I believe you can do like 300 emails for free than they charge you a fee but it's nice for a start right?)(Oh, and the fee is $5 a month)

http://www.phplist.com/

" * phplist is a one-way email announcement delivery system. It is great for newsletters, publicity lists, notifications, and many other uses. (It is different from group mailing list systems like mailman.)
* The Web Interface lets you write and send messages, and manage phplist over the internet.
* phplist keeps sending messages from your web server, even after you shut down your computer.
* 100 000 + subscribers. phplist is designed to manage mailing lists with hundreds of thousands of subscribers. phplist is excellent with smaller lists too!
* No duplicate messages. No 'forgotten' messages. phplist manages message delivery with a message queue, ensuring that every subscriber gets the email message, and that no subscribers receive two copies, even if they're subscribed to more than one list!
* Open/View Tracking tells you how many users opened your email message. This provides a minimum statistic, as many email clients with privacy or security policies block images (gmail, thunderbird, and others).
* Click Tracking tracks links and URLs. Statistics can be viewed by message, URL or subscriber.
* Multiple Subscribe Pages allow you to choose many different combinations of templates, languages, user attributes and lists.
* Templates are completely customizable, and make site integration a breeze.
* Multiple Templates on different subscribe pages can integrate phplist with several different web sites.
* Subscriber Attributes like 'name', 'country', and other personal information, are completely customizable. You can specify what information you need to get from users when they subscribe.
* User Specific Content. You can use Subscriber Attributes in message content to make each and every email message personalized with the subscribers name, country, or any other attribute.
* HTML email messages. Subscribers can be given the choice between text or html email messages. You decide whether subscribers can choose, what the default choice is, and what format a message is sent in: text only, html only, or both!
* The HTML Editor allows you to edit html messages from phplist using FCKeditor. TinyMCE is also available.
* Internationalization. phplist is available in English, French, German, Spanish, Portuguese, Traditional Chinese, Dutch, Vietname and Japanese and translation work is in progress for other languages.
* Easy Install via Fantastico, FTP upload, or SSH.
* Multiple List Administrators. The super-admin can assign lists to List Managers, who can manage their users and lists. The super-admin user can 'prepare' messages that can be sent by list managers to their lists.
* Subscriber Preferences. Every email message contains personalized URLs for subscribers to update their preferences or unsubscribe. Subscribers can update their own information and keep your database up to date. Unlike most other mailing list managers, in phplist subscribers can change their email address.
* The User Management tools are excellent to manage and maintain large databases of subscribers.
* Bounce Processing keeps your database clean of unused and non-existent email addresses.
* Advanced Bounce handling let's you teach phplist to distinguish between permanent and temporary message-delivery errors. You can define automated actions on receipt of bounce messages according to matches with your regular expressions.
* CSV Import and Export. Use CSV and tab delimited files to import your existing list of users or to export the users on the phplist system for use in your in-house database. phplist's database has a 'foreign key' to help keep multiple copies of databases synchronized without duplicating users.
* Attachments can be uploaded and included in messages for download.
* Send a Web page. Tell phplist the URL of a web page you want to send to your users, and phplist will fetch it and send it. You can even put subscriber-specific parameters in the URL.
* RSS feeds can be automatically sent to a mailing list weekly, daily, or monthly.
* PDF messages can be automatically created and sent as attachments to ensure that your message is seen the way it was designed by all your subscribers, regardless of their email message reader.
* Batch Processing is useful in shared hosting environments. Set the maximum number of sent messages in a given time period.
* Throttling can limit the load on your server so it doesn't overload.
* Domain Throttling limits the number of emails to specific domains to keep on the friendly side of their system administrators.
* Scheduled Sending let's you tell phplist when the message is to be sent.
* Repetition. A message can be repeated automatically to send updated dynamic content and attachments.
* Text from HTML. Text email messages are managed fluently in phplist. phplist will automatically create a text version of an html message. Optionally the message composer can create it manually.
* PGP signing and encrypting (soon).
Send your message digitally signed or encrypted, or both.
* Email to Fax (soon).
Configure the details of your favourite email 2 fax gateway and phplist will send the HTML version of the message as a PDF attachment to your fax gateway. The fax will include the images in the HTML.
* Integration with other tools. Several systems exist on the internet that integrate phplist with your favourite CMS or blogging tool. Check out the Documentation for a list."

Well for a blog you have the following FREE!!! sites:(again haven't used it but at least to start they are free you might want to check them all out)

http://b2evolution.net/
http://nucleuscms.org/
http://wordpress.org/