Emails (Bouncing Back)

I never used to have this problem with "Hotmail" but since the upgrade to Outlook, I've had a few people telling me (the other week) that they cannot send me emails because it bounced back. Firstly, I was not aware Outlook had a storage capacity, until then. Secondly, my Inbox has never been that full to begin with. Now I have to dedicate time into deleting emails and creating folders just so that I can keep important emails. Its ridiculous. I am hoping that they will amend this.