The other major efforts underway in my group are Windows Live Mail and Windows Live Mail Desktop. They've now made an official announcement, and I wanted to be sure to link to their blog and encourage anyone who is interested to go to http://ideas.live.com/ and get into their beta!
When I say they're in my group, I don't mean that they're in the overall big organization that is Windows Live. I mean they're sitting side by side in the same set of offices with Windows Live Messenger team members, we work together daily and are trying to make the integration between the two apps really slick and useful.
Personally I've headed towards having an Exchange server running at home (via Small Biusiness Server, which turned out to be really great), but now I'm leaning towards having things hosted and having either web interfaces or client apps to interface with them. I'm going to try out the betas and set up a hotmail account to see how well it works for me.