1. Go to [Settings]
2. Select [Mail, Contacts, Calendars]
3. Choose [Add Account...]
4. Select [Microsoft Exchange]
5. Enter your full email address in [Email] and [Username]
6. Enter your password in [Password]
7. Click [Next]
8. The verification take place, and the [Server] field will appear
9. Enter 'm.hotmail.com' in the [Server], without the quotes
10. Click [Next]
11. You could choose to sync Mail, Contacts or Calendars now.
12. Finally, click [Save]!

http://email.about.com/od/iphonemailtips/qt/How-To-Add-Free-Push-Windows-Live-Hotmail-To-Iphone-Mail.htm