If true, I suspect this is part of their apparent move to a more paid-service model. This has been happening with Google Apps, where they've increasingly obscured the free/Standard/whatever-they're-calling-it-now level, have reduced the user cap for that level most recently from 50 to 10, and are promoting the paid business level more heavily including e.g. on the sign on page for (just/plain) Gmail.

5 GB for free. Or sign up for Google Checkout, erm Wallet, erm... What's-It-Now (Play?), and get more space.

Could be wrong. But that's my off-the-cuff read, if the information is accurate.

That said, 5 GB might be plenty for the casual, Gmail-type user. Also, I'd like to know whether it is a separate allocation; since it is less than the current "free" allocation for Gmail, I'm assuming so.

P.S. One could also compare this amount to the per user quota in Google Apps free/Standard/erm level. I'm not recalling what that is, right now -- 5 GB (which would match this, WRT documents), or 15 GB. IIRC, the Apps quota includes email storage.

I think this product will compete with dropbox more than gmail.

People are much more likely to use the full 5GB for file storage than they are to use the full limit of their gmail storage. The limit on gmail is high, but I think Google is banking on the fact that the average user will probably use less than half of that storage.