I use USPS because First Class Package is reliable and inexpensive. I think it's called Ground Advantage now. You can buy postage from sites like Pirate Ship. Before you buy, you can compare the pricing between USPS, UPS and FedEx.

For packaging, since my items are soft (socks, hats, blankets), I use poly mailers. I use Ecoenclose since the materials are a little more environmentally friendly and I like the additional design element that they can be reused for other purposes.

Hope that helps!