Private blogs have the problem of not having a good way of notifying readers of new posts. RSS feeds don't work, and therefor services like FeedBurner don't either. Blog surfer is a nice feature for private blogs, particularly if you have a number you are a user/reader/contributor to. With Blog Surfer, you are still required to login to your wordpress account to check for any new posts though. I understand that email notification has been discussed before (I have searched for and read them), and that there are some security/spam concerns. I think my suggestion gets past the spam concern and hopefully wouldn't require too much in the way of resources.
I would like a additional option in the Blog Surfer to be alerted by email if one of the blogs I "subscribed" to is updated. I think simply a note that the blog has updated, there is no need to send the content. This would be an opt-in by the user, so the spam should not be a concern. The user would also be able to choose which blogs he/she would want emails about, and could choose to discontinue the emails at any time. I assume that wordpress.com already currently runs some type of email server as it handles the signup and sends emails for comment moderation. If there is some worry about resources, perhaps the email notification could be only be available for private blogs (since there are other options for non-private blogs). Limiting it to private blogs and making it opt-in should keep the number of emails sent down. It would however provide a very valuable service that is presently unavailable for private blogs.