The blog facilities offered by the domain/hosting sellers are usually scaled down versions of the blog software providers, and as such as less appealing than a blog facility provided direct by the blog company, so the best (IMHO) option is the purchase the domain name and then register with one of the big hitters in the blogging world - Blogger, Wordpress Etc., and point your domain name at it (instructions can be found on the blogging sites).
Some blog providers require an upgraded account from the standard free account, but these are often far cheaper than a bells and whistles web host package, and will allow embeded video, eShops, Etc., etc.
As for the blog Vs website question - blog are equally as visible as websites, especially when they are based on a domain name. Google and other seach engine bots trawl them in exactly the same way, and rankings can be just as high, or higher, as websites.
Many companies, bodies, groups, and individuals now choose the blog route simply because it is fast and easy to set up, can be modified with ease and with a multitude of options.
A site created in this way is in a sense a departure from the original conception of the Blog, and is often indistinguishable from a website. One advantage is that you can allow other users to add content, which on a conventional website is problematic if it involves modifying HTML documents directly.
It may not be right for everybody, but can be the solution to a number of problems for a website novice.