I have a blog added to my site. I setup a part of my site so that it displays the RSS feed from my blog in a side bar. This way my site viewers are able to see a sample of 3 of my latest posts and get to my blog by simply clicking on a title.
Now my blog is wordpress software hosted on my server. I chose wordpress for a number of reasons. Mostly because it allows far more flexibility than Blogger does. There's a whole lot more you can do, even when it comes just to formatting your posts.
Wordpress is also about 80% SEO'd OOTB (out of the box). I installed an All-In-One-SEO plugin to my wordpress which bumps the SEO aspect another 10-15%. This leaves the other 5-10% being entirely good SEO practices in your posts.
I also have my posts pinging in a whole lot of places. I cant remember all of the services that ping my blog but I think I'm not even using FeedBurner. I found another one that pings most if not all the sites feedburner does, plus more.
I also manually submit each of my posts to social bookmarking sites such as Digg, Google Bookmarks, del.icio.us, etc.
I'm an analytics nut. I love seeing to tweak something in my marketing strategy and observe its effects on a whole lot of aspects of my sites stats.
One thing I noticed is that having a blog connected directly to your site will increase the traffic you get from various key phrases.
For instance, having a post explaining why a customer needs a website to improve their business will get you traffic from the people who simply type into google, "Why do I need a website?". And that is one of my most searched key phrases.
Dont put a blog on your site simply to just have a blog. There are a whole lot of things you should do to do it right. SEO it totally, write strategic and well thought out and written posts.