There are many options in the email marketing space although most of the more advanced ones come at a substantial cost. A short list includes Email Labs, Blue Hornet, PostFuture, Cheeta Mail, Topica, Yesmail and Echo Mail, just to name a few.
As far as "reasonable" hosted email solutions go, I consider Constant Contact, Aweber and Campaign Monitor the best that I'm aware of. They all have different pros and cons though so you should carefully evaluate which is best for you.
Sleek, easy to design templates, great reports. I love it and so far my clients do too. They even have a slightly different version called MailBuild that allows you to create a template and let your customers write and send their own emails.
The above are pure-play email marketing services. If you're looking for a service that does not only outbound email marketing, but also lets you manage email responses, contacts, and calendar, then check out these guys: