Here are some ways that using email can help.
1. Studio notifications/newsletter/calendar. This is a great idea to improve communication between students, teachers, and parents. Not only that, it gives parents more of a sense that they've bought into a community, not just lessons.
2. Student updates. Unless your students' parents sit in on the lessons (which I recommend), they will probably be very much in the dark about what their child should be working on. Don't leave it up to the student to tell them - you might as well leave it up to them to guess! (Think of it this way: "No, I don't have any homework this week.") Keep them updated on what the student should work on for the week, and what should be prepared and to what degree for the next lesson. Give them feedback as to what areas need improvement, and also what the student is doing well at. They'll be glad to have specific, concrete information from the teacher.
3. Parent email tree. When parents feel more responsible for the running of recitals and other events, as well as the integration of new families into the studio, you will most likely have a higher retention rate, as well as happy families! Parents need a support network, if only to compare notes, and complain about how difficult it is to get their kids to practice!
4. Help through attachments. Depending upon how available you want to be, this is a great option for really dedicated students who want a little extra help. They can scan and email their music for fingerings, or even record themselves playing for some extra feedback. More complicated questions or requests might reasonably have a fee attached (e.g. review this whole CD for my college applications, please!), but it's best not to nickel and dime students for basic advice, and certainly not everyday questions. This is a tool that can be especially useful in helping students prepare for upcoming concerts or competitions.
With a little creative thinking, email can be one of the most useful tools in your studio.