From this autumn, all free Hotmail accounts will have a 250MB inbox, as well as the ability to send and receive attachments of up to 10MB. With MSN Calendar, you'll also be able to manage your time more efficiently by sharing your calendar with others. You'll also get twice the amount of spam protection with the ability to block up to 500 specific e-mail addresses or entire domains.
Seems they're trying to compete with Gmail... maybe so many people signed up via hotmail accounts and they're starting to get worried! I personally still use my Hotmail account for MSN Messenger.
The next logical step for Google may be to introduce a Gmail Messenger. This could possible store the conversations in a folder on the users account. Would be a natural progression, but could it compete with MSN Messenger... maybe Microsoft should allow communications between different messenger networks. That would be extremely worthwhile.