Hi,

I am looking for a powerful mailing list service or script (we can host it on a dedicated or vps server if necessary).

We have an estimate number of 2000 subscribers (and would continue to grow), and would need something good to manage them.

It should be web-based, and allow the sender to do things like "mail merge" like things like: Names, Addresses, and custom variables that can be displayed. For instance, if the subscriber's name is Alice, the script should allow:

Dear <<Subscriber Name>> --->>> Dear Alice.

Anyone would recommend me whether subscribing to a mailing list service or would recommend a script? and which one?

Check out MailChimp.com
There is a Free version which you can store up to 500 subscribers and send up to 3,000 emails a month.

I like MailChimp because it's easy to track everything, so you can see quick results for every email campaign you send.