Reading the Hotmail help it says something to the effect of "new accounts won't support access through OE or Outlook", which fits with my experience as access to my account is still working through Outlook (I just checked again to be sure).
I can understand Hotmail taking this step as the junk filters at work have seen an increase of mail originating from @hotmail.com addresses recently so it was obviously being abused.
As for why I'm sticking with the hotmail account when I already have a very capable work based e-mail service, an ISP provided one, a g-mail account etc....I've tended to use the hotmail account to maintain a limited degree of anonymity when registering to access various web sites where I couldn't be confident of their policys of selling on details etc, and the password recovery services send the details to the address they were registered with. I also find a web based e-mail system is useful to access when out and about and you borrow someone elses machine for a quick e-mail send....and when I started using hotmail there wasn't a free alternative that was any good!