With any small business you have a lot of self promoting to do to get your name out there. I don't sell on any other online venues besides Etsy, so this is especially important for me. I from time to time list on Craigslist but you have to be careful that you don't include your store link or they will remove your listing. Flikr has been especially helpful for me, it's more of a portfolio for my work a lot like TalentDataBase. I've just started listing again on YouCraft.org which is similar to Craigslist but your website can be listed and it's solely crafted items. Of course my blog is also used to advertise. I also use some social networking sites like MySpace, Tribe.net, Facebook and more recently Linkreferral. This is just a few...I've joined others but I'm not really all that active on them. With working a day job, I really have a small space of time to do my self promoting so I have to pick the ones that will get my shop seen the most.
I'd say the most important self promotion that you can do is customer service. I can't emphasize this enough! How you treat your customers can definitely make or break you. If you as a seller and business owner are pleasant to deal with and go above and beyond to make sure your customers are happy, they will Remember, Return and Refer...I like to call this the 3 R's (these are the three things that I always keep in mind). Remember that they are contributing to the success of your business so be thankful, be courteous, be polite and make sure that they know how appreciative you are that they chose "You" to purchase from.
Now on to "Sales and Discounts". A lot of Etsians have SNS's (Saturday Night Specials/Sales), I haven't done one of these yet but may try one soon. I offer discounts during special events and free shipping during the holidays. I will be making Gift Certificates for the upcoming holiday season as well. I also put items on sale within my store...but these are normally items that are out of season. Another thing I do from time to time is include a little something extra with purchases. This can be something as simple as tea, cocoa, earrings, magnet...just use your imagination. I probably wouldn't use candy, the biggest complaint is people want to know how old it is, where it came from, etc., so be mindful of the customer here. Ways you can advertise your sale is to post them on all of your social networking sites (make sure it's not considered spam), in your stores front page, and in the Etsy forum. I don't suggest sending emails to customers who have not signed up to receive them. If you want to send these out I would suggest that with each sale asking your customer if they would like to receive promotional emails from you. Please don't assume that they will, you may lose some customers this way. Everyone likes a sale, but some don't want it shoved down their throats either, so again be mindful of how your customers may feel.
These are all just the way I do things, avenues that I use to promote and advertise. These may not guarantee a sale for you or myself, but they are definitely ways to get your name out there. If you try these, or currently use any of the online places listed above to promote I'd be interested in hearing your stories, successful or not, feel free to share!