If you go to admin/sales/orders and select edit for the order you wish to change you can change the status of that order. Scroll down to the bottom of the page and you will see "status". Once you have added your comments etc. slide the bar to notify the customer, go to the top of the page and select save. The customer will than receive an update.
If you want to change the mail template you can do this in admin/design/mail templates/ Order status update email to customer