We use eReleases which distributes over PR newswire for about half the price ($400). See http://www.ereleases.com/submit.html for details, we have been working with them for more than two years and been very pleased.
Press releases are not appropriate for every startup’s marketing communication: you need to make sure that you have the right message before you broadcast it widely. One of the advantage of doing individual interviews in the customer discovery and validation phases is that you can tweak your message between each conversation.
You will need to experiment and understand what keywords in the title and the first paragraph make them more likely to get picked up by relevant publications. It’s also more compelling to include a quote from a third party (typically a customer) who can validate/substantiate one or more of the statements you are making. You can think of them as larger and more expensive Adword ads.
We have seen excellent results (increased SEO, direct sales inquires) from well written press releases. But, like an adword, the lack of a compelling title or poor first sentence can have them fall flat.
I would not send press releases to bloggers (who have not signed up for press release distribution through one of the services) but work with them on an individual basis. Identify blogs who address an audience you are trying to reach and leave substantial comments: not “look at this link” but one to three sentences of relevant content that responds meaningfully to the blog post you are commenting on. You can also approach bloggers to see if they are interested in a short interview or Q&A with one of your team.
If you are bootstrapping your startup you need to focus on where your efforts will do the most good: analyze what publications or websites are most likely to attract the audience that you want to reach and laser your efforts towards them. Relationships take time to build so plan your efforts for a set of activities you can sustain. If you are in the early customer discovery phase there are almost certainly bloggers who knowledgeable about the market you are targeting and who would be willing to give you ten to twenty minutes on the phone to give you feedback on your product idea.