Do you know if Hotmail offers SSL encryption?
Yes it does. Can't recall if it's enabled by default or not though.
If you have an android phone, hands-down Gmail has the best security. If you don't and don't mind locking your email access to specific computers, Hotmail has the best security. If you want to be able to access it from any computer, though, Gmail still wins.
That'll change if MS ever decides to lift the stupid 16 character password limit.