We use something custom - we deliver contact emails via Google AppEngine, via a private webservice.

It was really simple to set up, virtually free (0.0001c per email), and Google's got pretty much the gold standard for delivering mail.

One drawback is your from: user has to be verified and set up in the AppEngine dashboard (not difficult), and on the free AppEngine account you can only send 2k emails per day. Once you're on billing, the quota sky high.

Let me know if you'd like to see some code.