Hotmail users lose entire email inboxes, Microsoft restores them 5 days later
Microsoft hasn't yet stated the cause of the massive data loss, but considering some users lost email inboxes spanning years, we should be glad that adequate backups were kept. The data loss occurred around December 28, and it affected everything in Hotmail accounts, including sent items. Some users reported that the only message they had been left with was the classic "Welcome to Hotmail" email.
Still, it seems like everything is now back to normal. Considering just how much data was lost, it was probably a crashed database server which then had to be restored -- but hopefully Microsoft will let us all know what really happened.
Update: Microsoft says that 17,355 accounts were affected by the outage, which was apparently caused by "mailbox load balancing between servers."