Gmail was a way, way, way better experience than Hotmail or anything else when it started (and even almost a decade later). Maps blew everyone's mind at launch too and instantly made an entire group of direction and mapping websites irrelevant. Google Earth was magical just spending hours trotting around the globe too. Reader (RIP) was by far the best RSS reader.
> Gmail was a way, way, way better experience than Hotmail or anything else when it started
I recall seeing it as sluggish and awkward when I finally decided to check it, abusing Ajax. Other web interfaces (that I tried) were more lightweight and predictable, and regular mail clients I found to be a much better UX. So I've mostly attributed Gmail popularity to Google promoting it, possibly using that invite-only policy to make the users to spread the invitations. It sounds like at least some users actually liked it, but I don't think it's a clear example of a good service by Google.
Don't forget the other advantage of Gmail over other webmail hosts back then: the amount of free disk space they gave to every account was HUGE. And if you wanted regular mail clients, IIRC Gmail always allowed you to use a traditional mail client, both over IMAP and over POP3.
