I just finished downloading and installing the Windows Phone 7.5 client from the Marketplace. The settings showed me that I had a total of 7GB of storage space. What happened to the 25GB of previous space? This is discussed over on this page. If you had an account prior, then you can keep the existing space if you go to SkyDrive and claim the storage now.
All you need to do is go to the SkyDrive storage page and choose Upgrade my storage. That's it—you're locked in for 25 GB for free.
When you click the link shown above, it will take you to the Manage Storage section. Then click the free upgrade.