Newsletters are great, but you need to make people subscribe. Offer something free for them to get listed. Often an ebook will get people listed. Look at my newsletter at
My Brand New Brand for an example.
As far as software, I use a program called
pommo which was recommended by Temi. I'm very happy with it, as it's quick and easy to use.
As far as visitors returning, I'm not so sure, I haven't used it for a blog and could detract from the main focus. It's useful for affiliate marketing (had some great results for my newsletters), but not tried it for blogs.