Microsoft has decided to more than double its Hotmail service capacity and will now store up to 5 GB of e-mail messages and images. They are undoubtedly hoping that this move will take them from the number 2 spot and unseat their rival Yahoo. The company also says that its performance will speed up, it will combine duplicate contacts in its address book, there will be a new “report phishing button,” and an option to log in straight to your inbox from the home page.

“We know this is going to be a big hit with a lot of you out there in blog land,” said Ellie Powers-Boyle, a program manager for Windows Live Hotmail.

It certainly is a big hit with those of us who like our Hotmail and have stuck with it despite the mini-storage for all these years.