billgates: Hotmail offers the Windows live admin center hub which is where you setup your custom domain for an free email address. It works fine without any issue. You get the 25GB Skydrive for free along with other free hotmail features. In the end it comes down to the email interface you prefer.
I have a windows phone and can pull my emails, contacts and calendar in real time (Exchange active sync). Have no hotmail calendar issues what so ever.
Thanks for all the replys. I'm hoping it will integrate with outlook nicely too, I'm guessing the hotmail ooption would be better suited on that front. So is the Exchange active synch a paid option?