1. People prefer email over RSS
On my Investment Blog I have close to 1800 Subscribers out of which 75% of them are through email. On IMTips.co the ratio of email readers over RSS readers increases close to 85%. Of course it all depends from site to site but I am damn sure majority of your readers would prefer email over RSS subscription. If you only offer RSS as a way to access your site's information you're excluding probably a lot people because many are still not aware of RSS and RSS Readers apart from few techies.
2. Email Drives Traffic to your site
I use Aweber's Blog Broadcast and you can see the results yourself.
I don't think I need to say when the email was delivered. See how the old readers keep coming back through emails. RSS certainly does drive traffic - however it has fewer subscribers and most people read the content in their feed reader rather than coming to the site but when it comes to blog broadcast using Aweber you just send the excerpt of the post which drives the user to the blog. It not only brings back user to the blog but it also encourages more interaction with my content. I see that I get majority of the comments when the email about that post is sent and not on the day I publish my post.
3. Email Adds more to on-page advertising revenues
As users are genuine readers of your blog they not only interact with the sites by placing comments but also provide good revenue from on-page advertisement like Adsense. You can see that email campaigns are biggest referrer of on-site ad revenue for my blog.
4. Better Affiliate conversion
No matter what I do and how much effort I put on other campaigns, affiliate promotions work really really well with newsletters without much of an effort from me apart from writing the content. Email makes people feel more connected and so when you refer them genuinely good products they convert well but remember if you recommend dodgy products they can leave with bad impression about you and your blog.
5. More feedback from users
You may have noticed that I always prefer to use my personal name and email when sending emails using Aweber and every week I get so many replies about the feedback of the content I sent. I haven't seen more feedback's from users by any other medium of interaction.