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1) You will need to set up a download system, I use easy digital downloads
2) There are WP plugins such as Newsletter which will do this for you, or you can use an external email provider (my recommended choice).
I recommend an external email system as they will protect you by sending the emails at set intervals etc and not over running your server (most servers will only let you send 100 emails an hour - if you go over you risk being shut down)
Take a look at an email provider like MailChimp. They let you send to up to 2k contacts for free. They also have a Wordpress plugin for the sign-up form. You can also design your newsletter in Wordpress and then ask MailChimp to pull the content from there in to your newsletter.[/URL]
If you want to completely automate you can get MailChimp to email your subscribers every time you post a new blog entry using the RSS Campaigns.
You can try downloading the Newsletter wp-plugin for a start, which I did on my first try using it. Or try MailChimp just like what andygambles has said.