Mauricio set up geekzonemail.com last week. In two days he signed up 50 new email accounts - pretty impressive. He's also posted a FAQ about how he did it.
I was talking with him about it last week and he pointed out just how easy it is to set up your own domain name to point to Windows Live Hotmail. So I went and did it with my own domain (actually two of them) and thought I might share the methodology here given it was so easy.
Firstly you'll need to own a domain name. I use Discount Domains, for NZ domains - NZ domains cost NZ$33 per year. If you want a .com, you might want to try GoDaddy as their prices are quite reasonable (at US$8.99).
Once you have your domain, head to http://domains.live.com and sign in using a Live ID. Once you are signed in click the Add domain button. Enter the domain name and click Continue (by default the "Set up Windows Live Hotmail for my domain" radio box should be selected). Click the I Accept button to accept the license agreement (of course you should always read this first).
Now head over to your DNS provider and change the MX record to match the settings given to you by Live Domains. You may also want to add the TXT record. Once you've done the MX record flick back to domains.live.com and change the MX record. In my experience the Live Domains should pick up the change immediately. Once done, you can add accounts to the domain.
If the account already exists (i.e. you've used it for a LiveID without mail in the past) you'll get the option to import it. This seems to convert the account without actually bringing any settings over with it, so if you used the account with Live Messenger, your buddy list will be no more (not necessarily a good thing). The association with other Live accounts (such as Live Spaces) will be retained.
Once you add the account, you can go to http://mail.live.com and login with the account details. If you imported the account you'll need to use the password that was originally assigned to the account.
Other nice to have features include the ability to have mail.yourdomain.com point to mail.live.com. You can also have maps.yourdomain.com (using Live Maps), blog.yourdomain.com (using Live Spaces), etc.
If you want to, you can also open up the mail as Mauricio has done to allow anyone to have an email address at your domain.
You are also not restricted to using web mail. Live mail supports the Outlook Connector for Live mail (recently updated), the Live Mail Beta (if you can get it - which you can't in NZ) or Windows Mobile (including push mail in Windows Mobile 6).
With messenger integration you'll also get a pop up (configurable naturally) that tells you when you get new mail.
What's not to like? - Did I mention each user still gets 2Gb of storage? Old news, but some people don't know it...