Google has announced the availability of 20 GB storage space which is shared between Gmail and Picasa Web Albums. As of today, Gmail offers around 7GB of free storage and Picasa Web Album gives 1GB of free storage.
Elvin Lee from Gmail team writes
While storage costs have been dropping naturally, we’ve also been working hard to improve our infrastructure to reduce costs even further. Today, we’re dramatically lowering our prices to make extra storage more affordable. You can now buy 20 GB for only $5 a year, twice as much storage for a quarter of the old price, and enough space for more than 10,000 full resolution pictures taken with a five megapixel camera. And if you need more than 20 GB, you can purchase up to 16 terabytes!
The prices for the various storage plans ( as i write this post) are
20 GB ($5.00 USD per year)
80 GB ($20.00 USD per year)
200 GB ($50.00 USD per year)
400 GB ($100.00 USD per year)
1 TB ($256.00 USD per year)
2 TB ($512.00 USD per year)
4 TB ($1,024.00 USD per year)
8 TB ($2,048.00 USD per year)
16 TB ($4,096.00 USD per year)

Head over to google.com/accounts/PurchaseStorage to purchase extra storage space. It might take around 24 hours for the storage to get added to your account.
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