Congrats!
The digital photo thing works best. There are a bunch of online photo centers, but I've used Sams.com or Snapfish.com or photoworks.com. They all have greeting card or announcement options. Pick an announcement, upload your photo, and your order can be sent to your house within a few days. They should send envelopes too, so you don't have to worry about purchasing them separately. Some of these places also mail them for you. However, I prepared an address list in advance and printed address labels.
We simply uploaded our photos soon after we came home from the hospital. When the announcements arrived all I had to do was stuff the envelopes and slap on an address label and a stamp. It was sooooo easy.