Are there any disadvantage in using Magento to send my newsletter and other emails to my list vs contant contact?
Magento is a great tool and offers you many cool features, but using the email is no good idea.
Use one of the providers you can find in the internet. They know what they are doing. They have good configured mail servers, check your mail before seinding against the spam word lists, show your mails in differenz mail clients and log everything (loaded image, clickrate, open emails, ...).
Magento does this not.
I'm not sure to write this list down, but companies I head good things about (I never used emailmarketing):
Fabian's answer is the correct one. I will add the following:
Things you do not get by hosting email on your own domain:
SPF/DomainKeys/DKIM; any good ESP (Email Service Provider) will have this set up for you on day 1. This provides authentication that the person sending the email is actually you and that you authorize email from your domain from the origin mail server. Pre-requisites: hosting your own DNS (or a provider willing to work with you).
Bounced / marked-as-spam reports. You need to know if you're annoying your customers!
Notification if a domain/service has blocked you. An ESP will help you take necessary steps to rectify the problem and tell you if your email looks spammy to begin with. They'll also throttle sending, which is a requirement for some webmail services like Gmail/Yahoo/Hotmail.
Open / Click tracking. This is huge if you're trying to get a guage on just how many people are actually reading those emails you spend lots of time crafting.
One-click unsubscribe with analytics/metrics/reports.
Forward-to-a-friend and other viral sharing capabilities
"Trouble reading | click here" functionality. Magento does not host a CMS page with your email by default to make content easier to read on various devices. ESPs do.
Conversion tracking / GA / Analytics integration. Magento's Analytics integration is decent. But if you want to get real control over channel attribution (the fancy phrase for knowing how much money you made off of specific emails and campaigns) you'll have to code every link yourself. Again, all ESPs do this for you.
I have had the pleasure of working with the following ESPs, all are Magento partners:
Some that I've used that did not have integration with Magento at the time:
A budget option, if you're not needing all of the contact management features and some of the other fancy stuff, and all you need is click/open/SPF/DomainKeys is to go with hosted SMTP / mail relay.
A few I've worked with:
@Fabian and @philwinkle answers are excellent. I will add the missing one - Campaign Monitor
There is a module written by Fontis;
It says it's only for 1.6.0 and before, and it is also no longer supported. However it works perfectly in 126.96.36.199, as long as you are aware of one thing.
The Fontis documentation is wrong. I added this to a review of the extension in Magento Connect but it got deleted when they upgraded the reviews system. The Fontis docs are here
And my notes on why they are wrong and how to do it so it works are here (Note: self blog post).