Google today updated its Picassa and Gmail services, offering increased storage space, but not for free.

Just a few days after Microsoft’s Live SkyDrive (formerly known as Live Folders) set off to conquer the Web, Google informed us that the generous Gmail service is getting an even more generous storage space, but…you’ll have to pay for it.

Ryan Aquino, Software QA Engineer Lead, Picasa Web Albums, wrote on Google’s official blog that the recent move is aimed at quenching users’ increasing thirst for online storage:

“In the case of online storage, whether it's a picture, a video or an email, you should just, well, be able to store it without having to worry about whether you've got enough space in each particular product.”

From the 4MB Yahoo was offering back in 1997, to the 1GB Google started offering in 2004 for its Gmail service things have rapidly evolved and eventually the “simple” e-mail turned into a fierce battle for customers who click on the commercials displayed inside their virtual postal boxes. Google was again the first to raise the bar at 2G, prompting an immediate response from its search-engine rival Yahoo, which in late 2004 showed its muscles with 250 MB of virtual space- soon after that, in 2005, increasing it even more, to 1GB. On March 28, Yahoo began offering unlimited storage space for all e-mail accounts set up on its domain, and said it was also looking into the possibility of bumping storage space for its photo site Flickr, which is now the top destination on the Web for amateur or professional photographers.

Despite Google’s leadership in providing customers with generous, free offers, their service remained quite unpopular, especially because until recently users had to sign-up using an invitation from somebody else- unlike Yahoo’s approach, which poses no restrictions at sign-up.

Google’s recent move is likely to be met with the same lack of enthusiasm, since from the standard 1GB free storage for Picassa and 2.8GB for Gmail you’ll have to pay $20/year for 6GB, $75 for 25GB, $250 for 100GB and $500 for 250GB. SkyDrive offers 500MB for free.

Google has a similar offer for the small and large businesses worldwide, charging $50 annually for the Premier Edition of Google Apps, and plans to include other applications (like Docs&Spreadsheets) in this subscription-based circuit.