Blogs (short for web logs) are not only free and easy to create, but they can help you generate traffic if you produce good content and actively promote them.
The key to building free search engine traffic is to get as many quality, related sites to link back to yours. Google, Yahoo, Live and others take this into great consideration when ranking your website for keywords you seem to be targeting.
Your blog can act as that high-quality, "related website" to point to your own, and in the long run it can attract its own traffic.
I used to use Blogger.com but switched to WordPress because it offers more flexibility.
It looks more professional to have your blog on your domain than hosted at a 3rd party and WordPress has a ton of plug-ins you can use to enhance and customize your blog's look and functionality.
If you do decide to use WordPress, I would highly suggest you use Webhostpad as your host. They have a program called Fantastico that allows you to install WordPress in seconds right on your domain.
Lesson #10 : Traffic Optimization - Create RSS Feeds