Yes, Hotmail is retrograding in every way -but one- to a state similar to that of some 10 years, or so ago..- & yes again, Gmail is one of the best [I did join].
However, I have sent Microsoft three "not very" flattering feedbacks. I feel, if more of us let them know of our displeasure, they may be more inclined to listen to us; I have pointed out the shortcomings, the facilities which have been removed & commented generally on the drab, boring & cheap appearance of their "lousy" (sic) design.
I dared them to answer my criticisms -needless to say, I don't expect any reply.-
(At least, I have had my moan.)
bmw

I have a Hotmail account but it's not my main one. I use Gmail for my main email and have my ISP web mail forwarded to it. As far as ads go if you have the adblocker plus ext. in Firefox you won't see the ads, at least I don't though sometimes in Hotmail with Microsoft newsletters I have to turn it off to see the images in the newsletters.

To "mindblower"...I have some info for you in case you return to this page (it's been a few months since your post )!

I am currently a "hotmail" user and have been looking for a different email service (free, of course!) for a long time! I just discovered a "free" webmail service WITHOUT ANY ADVERTISEMENTS WHATSOEVER! Also, I've listed some things which the free email service provides (there is a premium pay service which has a couple more items available, too).

The NAME OF THE "FREE" EMAIL SERVICE IS CALLED: [b:118cflyb][u:118cflyb]bigstring.com[/u:118cflyb][/b:118cflyb]
...[u:118cflyb][b:118cflyb]NO ADVERTISEMENTS[/b:118cflyb][/u:118cflyb] - I repeat, "NO ADVERTISEMENTS WHATSOEVER"!!!!!!!!!!!!
...only your email address (which you select to use when signing up) needs to appear on emails
...unlimited storage
...self-destructing email (THIS IS ACTUALLLY FUN TO WATCH DESTRUCT...5 DIFFERENT WAYS! The earliest you can have one self-destruct after recipient opens message is 15 seconds, but the time can be much, much longer
...[b:118cflyb][u:118cflyb]uses FOLDERS[/u:118cflyb]!!!!!!!!!!!! (YEAH!)[/b:118cflyb]
..."recallable/erasable email, non-forwardable email, non-printable/savable email"
...track emails: "find out what time and how many times the email was opened and read, and the IP address that read the email...it works automatically...is invisible to the recipient (unlike other send-receipt requests)...permits tracking of an unlimited number of emails"
...very secure and private
...the email service was "tested and works on PC (Internet Explorer versions 5+, Netscape versions 6+, Firefox, Mozilla
and Mac (Safari -all versions-, Internet Explorer -all versions-, Current Netscape versions, and Firefox);
works any place that you can receive emails including most handhelds"
...address books import/export is available with certain services..."Hotmail does not currently support address book exporting"---
...video email up to 5 minutes in length allowed with the FREE service account
...send pictures & attachments
...IM services available
...cancel free account: "simply don't log into your account for 60 days and it will disappear"

Anyway, I've only had it a few days and haven't had much time to use it. I was looking for an email service that used "folders"!!! I searched "email service reviews" and chose to look at "email.about.com"...that review, of course, shows a personal review and I don't know how old it is. I did further searching and finally decided to give it a try...and I really think I'm going to like it (I HOPE!). So for what it's worth, I hope my post is of interest to someone and perhaps even of some assistance?!? Hmmm...perhaps my post contains way too much info?! If so...please forgive me!