I just noticed the eWeek article MSN Hotmail Nears Storage Finish Line which reports

Microsoft Corp.'s Internet division on Thursday started offering 250 MB of storage to new users of free Hotmail accounts in the United States and eight other countries. New accounts previously received 2MB of storage. As for current Hotmail users, the majority has gained the added storage and the rest will be upgraded over the next few weeks, said Brooke Richardson, MSN lead product manager. Hotmail has about 187 million customers worldwide.
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New Hotmail users will get the storage in two steps. They first will receive 25MB of e-mail storage as MSN verifies that the accounts are for legitimate senders of e-mail and not spammers, Richardson said. After 30 days, they will gain the full 250MB of storage.

The increased storage also comes with an increase in the maximum attachment size to 10MB for free accounts.

A new photo-sharing feature in Hotmail lets users browse thumbnails of digital images and include multiple photos in an e-mail with one click, Richardson said. The feature also compressed the image files.

The article doesn't mention the eight other countries where the large Hotmail inbox feature has been deployed, they are the U.K., Australia, Canada, France, Germany, Italy, Japan, and Spain.

I am curious as to how much of a deterrent the 30 day waiting period will be to spammers. You'd think that using CAPTCHA technologies to prevent automated sign ups would get rid of most spammers but it seems like they are still a problem.