Jeeves said yesterday it will offer users of its MyWay, Excite and iWon email services 125MB of storage on free accounts and 2GB of storage on paid-for Excite Gold accounts. The company picked up all three of those services when it bought Interactive Search Holdings Inc recently.

Microsoft said later this summer it will upgrade its free Hotmail accounts from 2MB storage to 250MB, with 10MB attachment limits, and will offer a $19.95 upgraded service that doubles the attachment size and allows up to 2GB to be stored.

The shakeup in the market was caused by Google’s Gmail, which is still in a limited invitation-only beta test, but which promises to offer 1GB of storage to its free users, as long as they consent to see ads triggered by the content of their emails. Yahoo started offering 100MB to free users last week.