Everyone has been speculating about whether Google Base is Google's entry into online classifieds. I have argued that it's about much more than classifieds. But I can tell you with confidence that MSN is soon to enter the online classifieds market. The company has been working some time on a classifieds site that it will offer through the Windows Live portal. It's in "internal beta" right now.
I got a quick demo a couple of weeks ago. The site sweeps pretty broadly and has traditional classifieds categories, as well as services. It also seeks to leverage community features so that it's not just a listings database but much more dynamic.
I didn't see the live site in operation; I saw several screenshots (sorry I don't have any to share). The interface I saw was very nice and should give MSN/Microsoft an immediate presence in the now much more competitive online classifieds space. I expect we'll hear (and, we hope, see) more at ILM:05.