I've settled on this method for grading weekly undergraduate papers. I write short comments in the body of the paper. For longer comments, I write a circled letter in the margin of the hard copy, and type a comment for that letter in a file of comments on the week's papers (e.g., "a. This sentence is incomprehensible" in the comments file and a circled "a" in the relevant place in the paper). I can copy and paste comments if the same ones are deserved. I also type overall comments and a grade in that file. I then copy and paste the typed comments into email as soon as I've graded each paper, and send to the student. The hard copy, which explains which letters refer to what, is handed back next class.
A nice thing about this method is that students get a grade and some comments faster, though not all comments will be clear without the context of the paper. I also keep the major comments on my computer which is good for letters of recommendation. Another nice thing is that I no longer waste paper printing comments, as I used to. A fully electronic workflow, I suppose, would be a further step, but I am not sure I am ready for it.