Hotmail has that unique place in history in that it was the first jab at providing a free web based email gateway. Its originality can never be underappreciated in this regard. Ever since hotmail has been taken over by the evil empire (the other MS), it had become a guinea pig for testing new microsoft technologies, which is not always a good thing.
The interface as such is still easy to use and functional. However, introduction of MS passport technology has made it a horrible confusing heap. The passport functionality means that big brother is always watching you once your browsing habits are using the hotmail login to log on to other passport enabled sites. Expect to see more junk mail in your inbox due to this.
The email service as such is not on par with yahoo in terms of speed, availability and simplicity. As a linux user I can say that hotmail/msn pages are never rendered properly in Opera and Netscape. I am not too crazy about their popmail feature as well. Its good that this feature has been removed in their latest iteration. Yahoo offers you 6MB default whereas Hotmail is only 2MB. They also remove messages from your Sent Items within 30 days which I am not too cool about. The bulk mail blocking feature while good, only allows 256 addresses and is not very effiecient in stopping all the spam (read my previous paragraph on why this happens)
Another annoying feature, is that you are dumped on the msn.com site as soon as you logout. Once there, you will see a couple of popups appear on ur screen. I guess this is a way to generate hits to their site.
Unless you are a die hard fanatic of MS, there are better options available for someone looking to get a primary email account.