With the new release of the Microsoft Office Outlook Connector 12.1 beta, you can manage your Microsoft Windows Live Hotmail or Microsoft Office Live Mail accounts, including e-mail messages, contacts and calendars for free! This works for Outlook 2003 and Outlook 2007
But notice I did not say synchronize, because it really isn't a sync utility. It will create a new shared folder within your Outlook profile to hold your contacts, messages and calendars. An entry in your Personal folder for instance is NOT automagically updated in your Hotmail folder. You must copy/paste for that to happen. In the case of Calendar entries, you can show a single unified view. But again, these are NOT synched.
This also means that if you are on an iPhone and sync to Outlook you still only get the default profile folder...still no shared folder items.
So, one step closer, but still no panacea.
The link for the download is here:
http://www.microsoft.com/downloads/details.aspx?FamilyID=9A2279B1-DF0A-46E1-AA93-7D4870871ECF&displaylang=en