Here's how these services compare to me as a hobbyist.
Cost of service
This is free. Can't beat that. But I would not mind paying for some Pro account if it delivers the right features.
I pay for a pro account but the price feels right for unlimited uploads and sets.
Upload Limit
500 pictures per 30 days is too few especially when starting the account and using it to store/back up all pictures.
Of course unlimited uploads are good. I'm willing to pay for it!
Image Size/Type
I want to upload the original file. Regardless of the file type or size. No jpg optimization or other hocus spocus please.
I can upload the original file of whatever picture I have and trust Flickr not to modify it in a way that would impact quality.
Download Experience
My friends can download entire albums.
Can't download an entire set and I don't want to have trust this 3rd party tools developed by people I don't know.
Client Tools
Windows Live Photogallery is a good start. Add better, faster, upload AND download and synchronization features and I'm happy.
Which tools??? Somebody at Yahoo needs to realize that its OK for a Web 2.0 company to build a rich/fat client application. We won't make fun of you for this!
Service Details
It's difficult to find out what the terms of service are exactly. Which file sizes are supported? Can I get a pro account, etc...
All clear to me.
So please heat up the competition. Get the fundamentals right (file size, upload limit) and build some awesome client tools to start with. After that, invest in those nice to have Web 2.0, social web features (post to facebook...). Oh, and move fast!
If Windows Live spaces fixes some of the stuff I mention, I'll probably switch. Provided I have a tool that extracts my sets from Flickr and loads them into spaces albums. I know, I'm needy!