This Slashdot article on college oursourcing to Gmail and MS Live hits the topic spot on and covers it well. It's a highly-recommended read!
I have a couple of comments.
Worrying about privacy in the realm of email is nuts. People just don't get what email is. It's probably already crossed the Internet in the clear! For real ways to address these issues see my discussion of alternative email ideas.
Too late! I've already forgotten the second comment.