Get 500MB of free online storage with Windows Live Folders beta
Sure, there are plenty of other free file hosting services that give you more storage space, including AOL's 5GB XDrive service. But this is just a beta, and there's a good chance Microsoft will increase the storage space down the road.
The thing that sets Windows Live Folders apart is its integration with other Windows Live services, for example letting you share your files with just users on your contact list.
While the site isn't currently live, it should be up soon.