I have used Nvelocity on various projects over the years. It has always been a handy tool to have around, especially for email templates. The biggest pain in the arse with nvelocity, was that if you did some refactoring with resharper, (or god forbid, manually), it would not propagate the changes to my templates. You were also forcing front developers to learn another syntax, which was not always obvious if you wanted to do something non standard.
After experimenting with MVC in recent projects and in particular the razor view engine of late, I think I may have finally found a replacement. Razor was built to be standalone and as a result, you can easily use it as the templating system for generating emails. All the front end developers I have worked with like razor and they are already using for the main application views. The biggest win? Resharper supports the refactoring of razor views!
A quick google showed up several people who seemed to have the same idea.