We have been using email as a main part of our marketing strategy for quite some time now (since 2005) and built up a great database.
We use Campaign Monitor and spent the money getting a template set up. Once it was up and running I find it manages itself and the girls in the salon can go in and create the newsletter each month, upload images, etc. and it handles all the unsubscribes and bounces (it's very intuitive).
I wrote a
case study on it recently (hope you find it useful). Our big selling point is offering people a voucher when they subscribe and this has been very successful in building up our list.
bhhdesign's comments above about not being too salesy is VERY important. Remember, if you are doing a newsletter style email, it needs to offer value otherwise if you are just selling (whether you think it is or not) your email is effectively spam to the end user.
In terms of legislation, many of the online systems sit outside the EU, so this confuses the matter even more with email marketing. ie. The EU has the tightest restrictions of collection and useage of personal data and if your website is British and your business is British, but the data is sitting in America, it gets very very confusing in terms of responsibility.
If you are really getting into email marketing, I personally would suggest finding someone who can create you a template in a system (some of which have been mentioned above - eg. Mailchimp, Campaign Monitor) and get them to integrate the subscriber forms on your website. I can imagine, this would cost anywhere between £100 & £500 depending on who you find.
Then, all you'd need to do is send your email message on a regular basis making sure it offers value. In terms of Return on your initial costs, how many client bookings would you need to cover it? It could pay for itself very quickly.
Hope it goes well, whichever you decide.