Our first CD was with CDBaby, but we've released our last two CDs with Tunecore. They have a great array of services built in and they will distribute the music directly to the online download sites starting with iTunes. All of this for about $50 a year.
They can do mastering, CD duplication and marketing services also. Very reasonable on most of these. We had CDs made for the last one and they came out great.
Sites like MusicSubmit are great for getting your music seen and heard. It does cost though. But, they will let Internet Radio sites know of your music so they can decide of they want to add it to their rotations. They don't pay for playing the music, but it can be great exposure.