This is the question, isn't it? (As a disclaimer: I'm not a cynical person, everything I'm going to say is based on the tiny subset of the blogging world I've interacted with, so it could be completely untrue for the general case.)
Promotion is king. And no, spamming links everywhere is not how you go about 'promotion', as that'll most likely backfire. Like tys says, it's backscratching that works: it's much more subtle. Promotion need not always be deliberate/directed like the you-promote-my-post, I'll-promote-yours kind of backscratching followed on this site, it could simply be about your social connections. From what I've seen, bloggers who have bigger social circles in real life have more people following their blogs. Of course, you can always make that activity deliberate too - make real life social connections so that there's a subtle pressure on your 'friends' to read your blogs, but IMHO that would just be sad. 
Content is a close second to promotion. By content I'm not referring to the quality of information - good is obviously better there, but it's highly subjective. I'll get back to that in a moment. What the writer's blogging about is very, very important IMHO. Photography blogs are usually more popular than pure text blogs. Even among text blogs, blogs that talk about high school crushes are inevitably going to be more popular than blogs that talk about schools of philosophy. That's a duh statement, you might think. I'm just reiterating the point.
No matter the quality, some blogs will never be popular. As a less extreme analogy: blogs that are deep introspections on issues close to the writer's thoughts, blogs that have almost essay-like posts, no matter how well written, are unlikely to be as popular as the simpler 'journal' variety which narrate events in the writer's life, (probably) because they make for more difficult reading. So, what you're writing about is a big factor.
Quality is subjective. Especially in Indian blogs. From what I've seen, really good writing (subject to the type of content, of course) is just as much a turn-off (probably more so) for people as is bad writing. 'It's too verbose' is the usual criticism. While that's a good criticism if properly applied, I often find that the average Indian reader's standards of what's verbose does not correspond with a native English reader. If you're an aspiring author, you should carefully cherrypick criticism about 'verbose' writing because listening to everyone can kill your writing.
A similar argument can be made for grammatical correctness: you can only judge bad grammar by how good *your* grammar is. In India, the standards vary greatly. (That makes sense as few of us are native speakers/writers.) So you're safer being occasionally poor grammatically than 'too' right, as readers might find that cold and off-putting.
Does design matter? I think it does, and way too much IMHO. I agree that you shouldn't have a really terrible template for your blog as it'll distract from the content, but choosing whether or not to read based simply on an attractive design does not make sense to me. But I think that's how it works. People are more likely to forgive poor writing than drab/ordinary/neutral templates (they need not actually be bad). I suppose, for most people, reading blogs is not just about reading, but about the visual experience in totality. My tip: do not think of your blog as a book! We don't drop good books based on the font or the cover page, do we?
Frequency of posting is important, I'd probably give it the third spot on the scale of importance. I agree totally with what Siera has to say on this point, so I won't drone on. 
(I didn't realize I had so much to say on the topic. I should probably make this a blog post, eh?
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Oh wait, there's more. I think there's a fundamental point that's not been addressed here. Do you want to make money off your blog? Or do you want to have enriching debates with other people on issues close to your heart, conversations with faceless people you can never meet in real life? If it's the latter, then getting more eyeballs, or comments of the 'Great post, yaar' variety, or promotions are not really important. Of course, it might seem logical that critical comments that actually have something to say about the text (i.e. useful comments if you are blogger type 2) will grow in proportion to the number of people visiting the blog. Backscratching kills that idea though because it skews the ratio heavily in favour of those who're investing a 'Good post' comment simply for the expected returns.
Or, if your blog's just a diary, none of it matters. 