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No, blogs are not just SEO tools. Yes people subscribe to and read blogs. (More every day by my stats.)
If a blog has unique compelling content people want to read. it might also be a SEO booster. but any blog written specifically for SEO is unlikely to be unique or compelling.
Actually until 2009 blogs were usually the work of a single individual, occasionally of a small group, and often covered a single subject. More recently "multi-author blogs" (MABs) have developed, with posts written by large numbers of authors and professionally edited. MABs from newspapers, other media outlets, universities, think tanks, interest groups and similar institutions account for an increasing quantity of blog traffic.
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Yes blog is very crucial for Search Engine optimization. If you are a blogging page in your website which you are updating regular basis with new contents then you may not require to do more with SEO, Your blog itself help you to rank in Google
Blogs have their own purpose. It is just like an e-magazine with regular articles for the regular readers. And although the blog is one good factor in the SEO, it cannot be considered an SEO tool because a blog is more of a content. When you have a website that is not a blog, uploading contents or articles about the website is a plus factor for the SEO capability of the website. Since the blog is an article type of website, it has that natural advantage since blogs are contents.