I use sendmail, mysql, and handful of perl programs. We considered using some outside service a year or two ago but we were doing some targeted campaigns based upon purchase histories, geographic region, etc. and the trouble to pull out lists like that and then sync them with an outside service becomes a problem. Also our lists are large enough that the expense of paying someone to send them starts to add up.

Also, we tag each email sent with a synthetic key to a table that stores the specific email address and time it was sent. This way we can do stats on effects of time-of-day of sending on conversion rates, etc. Not that we're actually doing those stats.

Also, it's surprisingly easy to do mass emails and campaigns with a little perl or python and {sendmail || your_favorite_MTA}

Some of the services are really good and easy to use if you are only sending a few, though. I've heard good things about Constant Contact.