Recently I have found great article from Lee Odden: SEO Benefits from Blogs.
i give a short review of all basic blogs advantages for SEO:
* structured content divided on categories, tags, date etc.;
* SEO friendly addresses of pages, URLs which like not only to users, but also search robots;
* internal links to goods and services of a website;
* huge network of mutual links (blogs are used much more often for other user links, than websites);
* support of RSS feeds, which are quoted on other websites (often automatically) and blogs;
* fresh content which constantly warms up interest of users and search engines to your blog;
* active audience which creates comments, sends trackbacks, refers to your blog in forums etc.;
* non search traffic (through RSS subscriptions, from links from other websites and blogs, traffic from Social Networks, etc.).
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