There is an excellent thread at Cre8asite Forums on the topic of setting up a new blog and taking into account the SEO side of things.
One thing that I would strongly recommend and agree with in the thread is that you should always try to keep your blog on your own domain. Do not use a blogspot.com domain or something similar. Try to keep it on a domain name you control and own. This way if you ever decide to move from one domain to another, you have the control to set up the proper redirects and keep all your link popularity.
On the software side, there are many options. I use MovableType, I have been for over three years and I have been very happy with it. Most people these days in our filed tend to use WordPress, which is a great option for you as well. If I started my blog today, I probably would have went with WordPress, but I won't be switching to WordPress any time soon - because MovableType does almost everything I need. You can also use Blogger, but I have heard bad things about it - although they just recently released a new version of it - so things may have changed. Wikipedia has a nice maintained list of blog software where you can read more about it.
What about the URL structure? To subdomain or to go at it with a directory structure approach? The thread is on the side of locating your blog on the main root of the URL and placing it in a directory and not a sub domain. I tend not to go that route, but it really depends on how you want to keep the site structured and divided.
The big question I get is do I host my blog on my company domain or on a new domain? I always say it depends on intent. Do you want to provide an atmosphere for an unbiased information resource or do you mind coming across a bit biased? No matter what you do, in my opinion, a new blog hosted on it's own domain, will come off as if they are influences by business factors. You have to climb a hill of showing your would-be-readers otherwise. But in the long run, it may pay off, if you climb that mountain and earn the respect you set out for.
I strongly also recommend Bill's comment about writing several posts before deciding on too much.
Before starting, it might be good to script out the first 15 - 20 blog posts, with at least some partially fleshed out topics and posts ready to go - just like a coach might do in a football game.
When I set up blogs for my clients, I tell them to leave the design alone and just write. Keep writing for a month or two. Then let's see how it goes. As you write, you learn your niche. Then you can customize the blog, change URLs if needed and even change blogging software.
Most blog software is very search engine friendly out of the box. As you see, I use a number system for my blog, but now MovableType uses the title of your post in your URLs. Want to change that, Danny has a post on Movable Type & Rebuild Safe URLs.
Forum discussion at Cre8asite Forums.
