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What I heard was that they were updating their accounts from the oldest to the newest. You have to realize though that this will be done in stages, to make sure the load-balancing on their servers is working fine and still able to handle the load.
With 250mb worth of space, that can put a bit more pressure on the servers because people aren't as apt to delete mail in their account. And, spread over however many millions of users Hotmail has, the upgrades could really take some time. Up to a year maybe?
Google hasn't really had this problem yet because #1, they started with 1gig of email space by default, and knowing google, it was well tested for high loads, #2, being that Google's Gmail has no where near the amount of users Hotmail has, yet.
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"You hear the one about the fella who died, went to the pearly gates? St. Peter let him in. Sees a guy in a suit making a closing argument. Says, "Who's that?" St. Peter says, "Oh, that's God. Thinks he's Denny Crane."
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