Yahoo announced that it is increasing the storage limit on its free e-mail service to 1 GB. This increase will be phased-in beginning in April. The limit on the Yahoo service is currently 250 MB.
Although denied by Yahoo, this announcement is an apparent reaction to the rumor that Google will begin offering its free Gmail service to the general public around April 1. The Gmail service is currently in Beta and was the first free service to come with 1 GB of storage. (In the interest of full disclosure, I use both the Yahoo and Google e-mail services.)
Hotmail, Microsoft's free e-mail service, recently upgraded its storage capacity to 250 MB.