Easiest way to send an HTML formatted Newsletter is to use the fourth option of mail, which you can read about here:
http://www.php.net/mail
Simply create the newsletter in HTML (I'm not going to go over html here, sorry) and lets say that we have the contents in the variable $newsletter. We have the recipient in the variable $to and we have the subject in $subject. We just need to let the email reader (Outlook, notes, whatever) know that this is actually in html, not plain text. So we do:
mail($to, $subject, $newsletter, "Content-type: text/html");
The fourth option just sets the header Content-type to text/html so the viewer knows what to render it as. Hope that helps.
Chris King