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I've noticed myself that I don't bother to read them even if I'm interested....I'll click on a link instead. So in reality, if you're targeting me with an email newsletter that I signed up for it needs to be a soundbite....one topic with razor sharp focus as to what it will do for me.
HTML is good...pictures are good...above the fold is good...one thing at a time.
I put out a monthly newsletter for my one directory site. Aside from a few "how are things going" type notes, its primary purpose is monthly notifications of new listings on the site. No one ever commented on its length (I know, no real help here), but I guess to it depends on your target audience. But since the site deals with entertainment industry suppliers, I assume people sign up so they know who's available and thus do read the newsletter.