Microsoft have begun increasing free users accounts to 250MB storage and their paid subscribers to 2GB of storage. We exclusively revealed the details of extra storage back in June.
All users are expected to be upgraded by the end of the week *touch wood*.
Update: It appears you can get 2GB of space free by registering an @msn.com email address. We're not sure if this is in error or will be a permanent feature for new @msn.com sign-ups. For more information Click here
Update 2: MSN Premium accounts with @msn.com .NET Passport can use the following server:
Users need to tick "SPA" in Outlook Express and Microsoft Office Outlook.
Screenshot: 2GB Storage
Screenshot: Hotmail Pop3 Access Within Outlook
News source: Neowin's Back Page News