It sucks when you don't have any projects of your own, but then again, a lot of people want to start doing webdesign, and until they can make a name for themselves, it's hard to be noticed.
A mock/demo portfolio site is one way to go about it, you can have multiple sections in your website, showcasing different talents you have acquired.
You can present both designs and programming, you can show your prowess on multiple types of websites/platforms.
About the blog, you should really make a blog only if you really want to share something useful to other users, since nobody I know is interested in reading your personal journal. However, if you make your blog about your efforts in designing this, or that, setting up this script or that, it is likely to attract a lot of readers, since there are always people interested in finding out more stuff about how to set up galleries, slideshows etc.
Hope I was of some help