Years ago, a freebie CD was a treat but we've moved on. Promotional CDs in plain packages may now seem tossed off, unprofessional and desparate. They're like windshield spam, immediately crumbled up and tossed, often in the parking lot. Nowadays, a leaflet with a download address is probably better, but reluctant recipients may still feel put upon and bothered. Any physical item, including leaflets, passed onto another person becomes that person's problem to deal with. No, I don't want 1,000 signs for $99 or to listen to someone's DMB-meets-Jay-Z jam band. Many people don't have enough time and/or money to listen to the music they're already interested in; they don't want to be imposed to consider something else that is, more often than not, of no interest. They've developed their own filtering systems to find music they may like; forcing something else on them clogs those filters.
And enough with the MP3s. The MP3 is dead. Average download speeds are hundreds of times faster than when Napster started. Hard drives are now measured in terabytes. I no longer download lossy files (with occasional exceptions). ALAC or FLAC, please, or move along.
I still prefer physical media as the final finished product, although I'm starting to move to lossless files for singles and EPs.