I do it with Outlook 2003 and Word 2003. What I can't do is select recipients from Outlook itself, so because all my emails are sent to the same members of a club, I have their details on a spreadsheet.
Open a blank Word doc, and go to Tools>Letters and Mailings>Mail Merge, then select Email messages. Then you just follow the prompts at the bottom of each page.
Type your message in the blank word doc, exactly as you want it, ie, starting with Dear, or Hi, or whatever. Select recipients - browse to your spreadsheet and select or deselect as required. You've already written your message, so click Next.
Put the cursor where you want (for example) the name to be shown after 'Dear' and then add the names by selecting More items from the list shown in step 4 of 6 and select Insert. Close the box and select Preview your email messages. There are back and forward arrows at the top of the panel so you can check they are all ok.
Step 5 is Complete the merge, then select Electronic Mail. Add a subject line, then OK and it's gone.
Just make sure what you've said is what you've intended!! Hope this helps - just read the panel on the right hand side of the screen, as it tells you what is going on and what to do next