It's certainly not a secure practice.
But as to whether insecure sites using this practice are worse than other insecure sites, it depends on your users and threat model.
If 50% of your users' passwords are "111111", "qwerty" and "bugmenot", and 45% are equal to their logins, you could actually improve security that way.
If your password reset policy requires nothing but the user's email, which is very common, then any MITM or anyone with access to your or your user's mail has the door open already. However, they're not the only threat...
The real problem is the implications of such a practice. Hopefully the passwords aren't stored in plaintext, but emails get kept in some databases, and these passwords will leak when one gets mined. I get a lot of targeted spam offers to sell out the user DB of a website I run; don't know how many people accept those, but some clearly do.
Of course, if the only thing of value on your website is the users' email addresses, the damage has to be weighted against the mitigation of damage from password reuse for users who don't care.
For a site that has user data of real value, or especially a financial one, any transmission of the password is highly inappropriate. Even if it has to be changed immediately, that one-time login is better done with a one-time authentication token. So it's unlikely that any site following this practice is designed in a secure way.