Displaying many posts at once increases the chances that readers will see something they like. Just count the number of links in any one place at traditional news sites, such as the Washington Post's local page, though this can quickly lead to clutter. Luckily, blogs typically consist of one post after another in a vertical layout, with other page elements-- like "about me" and ads--off to one side. This linear presentation is less likely to overwhelm the reader, as the long string of posts is out of sight and mind until the reader scrolls down. The longer readers can scroll without having to click to new pages, the more likely they are to be engaged by what's being said and continue reading.
Conversely, having fewer posts per page makes the site load faster. This had been becoming less of a consideration the past few years as broadband speeds accelerated, but the issue has seen a resurgence as many people access the Web from iPhones or similar devices via 3G (or cellphone) signals. Additionally, profit-driven ventures will prefer fewer posts per page, as interested readers will generate more page views and ad impressions as they explore the site.
For many blogs, this decision will be dictated by the site's content, as pointed out by some commenters at BlogCatalog. A photographer's blog that contains a lot of high-res images should be limited to only a few posts per page, but blogs that consist mostly of quotations and short analyses can have dozens of posts per page.