I think you are underestimating the memory needs of future applications. When text and spreadsheets were all we used computers for, then a gigabyte seemed like overkill, but that of course proved grossly inadequate when photos, audio and video came along.

What will be these new storage hungry applications? Well, obviously no one knows for sure (this will only become clear when the technology is cheap enough to enable it). But here are a couple ideas:
- Immersive video (allows you to look in any direction you want) would be at least an order of magnitude more costly than regular video at any given resolution.
- Life-logging. Capturing video, sound, GPS position, vital-signs, etc of every second of your life (awake or not) so that you can revisit any time at will, have smart algorithms figure out trends, etc. (Dash cams are a dramatically limited early version of this)
- World-logging. Take life-logging from a person to a city (or larger) and grow the existing network of security cameras by an order of magnitude (and improve their resolution). Now broaden the video to also include audio and other environmental signals (temperature, humidity, pollution, seismic, etc.) and you have unlimited appetite for storage.

So... let's see... Hotmail has about 120Million subscribers, times 250MB - or a 1/4GB - that will give us what... about 30 Petabytes?! That's not chump change even for Uncle Gates. (Any cost estimates?!) Obviously, they are relying on the fact that the overwhelming majority of these accounts will never use anywhere close to 250MB. Still, as people stop cleaning up their mailboxes, and start sending more gargantuan attachements, it will probably start to hurt them soon...