While I have an OpenID account and I see it as a good alternative it is far from a perfect solution. There are better solutions out there as some of the commenters already mentioned. I bloged about it: http://www.cromis.net/blog/2010/12/your-passwords-security-on-the-internet/

Oh and about e-mail. It is by far the most reliable and wide spread medium of communication over the web. And It is not bad at all. I has one very big advantage. Everybody knows what it is and how to use it. Furthermore I can easily have my mails locally or on a server and have them archived. Good luck archiving all other means of communication. And yes, to me it is very important that I can look back to see what my coworker wanted me to do one year back.

I agree with TonyB. This is not a responsibility of your app. It just does not belong there. SMTP servers are build to handle such matters so you don't have to. Every serious company has an own SMTP server and an admin that manages it. And you have a lot of choices online if you don't have you own SMTP. What will you do if you mail gets greylisted, bounced etc... Will you mimic the mail server and try again later? Will you roll out your own mail server? Tha application should just pass the mail with basic info to the SMTP server. It is important however that you have a mean of processing the rejected or undeliverable mails. But this is commonly achieved by adding custom header entries so that the mail server is in a way aware of the sender.