a few people here have already said it - involve the end users in the decision process of what goes in and what waits. after all, its not about whats useful to you, but whats useful to your end user.
that said, i wouldnt leave it open to 'all users to decide'; there should be a representative from the user group who you work with (i.e. senior user role).
even then, you arent saying "what features do you want?" to the user, you ask them what functionality they would like to see arrive next. the reason why you put it to them that way rather then letting them pick off a massive spreadsheet of individual features is two-fold: 1) they dont know about dependancies, 2) you want to gather together a pack of features for a logical release.
so the user representative may say "we need to have the photo gallery working next". they might not be aware that the photo galery is practically the same as the file upload module (it just accepts different file types).
so, in the next release version, you pack together the photo gallery and the file upload - why wouldnt you, considering that the file upload is like 75% done because of the work that went into the photo gallery module?
i dont believe you necessarily have to work on the hardest features first, its what the users need sooner + what other features you gather together to make a 'logical pack'.
to a certain extent, you want to clear the feature log too. so for example, you could have the following features and estimaed times:
- Registration Form - 3 hrs
- Photo Gallery - 8 hrs (<- client has said they want this next)
- File Upload - 2 hrs
- Voting/Poll module - 7 hrs
- Stock Ticker - 5 hrs
out of these contrived features, i would take no. 2 (because the client is asking for it), then i would take no. 1 and 3. no. 3 because its practically done when the gallery code has been done, and no. 1 purely because its the smallest estimate out of the remaining features. nothing will give you or your coding crew the feeling of progress on your project like seriously beating down the feature list (it will probably refill though).
as far as letting people know about a new release and whats in it, i would do it via email (rather then by blog or within the program itself). and i would make it as brief as possible, bullet points, something like this:
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Version 1.1 of Blue Widgets has just been launched and is available for your use now.
The following has been added:
Photo Gallery
File Upload
- Registration Form
The user manual within the system contains more information on how these features work.
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bang - done, make it as easy for people as possible.